SAN FRANCISCO, Jan 20 (Reuters) – Elon Musk, Tesla Inc (TSLA.O) Chief Executive, testifying on Friday that investors don’t always respond to his Twitter messages as expected, and defended himself in a fraud case over his 2018 tweet that he had funds to privatize the electric carmaker.
Musk’s testimony began with questions about his use of Twitter, the social media platform he bought in October. He called it the most democratic way of communicating, but said his tweets didn’t always affect Tesla stock the way he expected.
“Just because I tweet something doesn’t mean people believe it or act on it,” Musk told a jury in federal court in San Francisco.
Musk testified less than 30 minutes before the court adjourned until Monday, and he was not asked about his 2018 tweet that he was considering taking Tesla private and that he had “secured the funding.”
He is expected to address why he insisted he had the backing of a Saudi investor to take Tesla private, which never happened, and whether he knowingly made a materially misleading statement with his tweet.
The case is one Rare Securities Class Action The trial and plaintiffs have already cleared steep legal hurdles, with US Judge Edward Chen ruling last year that Musk’s funding post was untrue and reckless.
shareholders claims that Musk lied when he sent the tweet, costing investors millions.
Musk, wearing a dark suit over a white button-down shirt, spoke softly and at times in confusion, a contrast to his occasional ones combative testimony in past court cases.
Musk described the difficulties the company was experiencing around the time he tweeted “funding secured,” including bets from short sellers that the stock would fall.
“A bunch of sharks on Wall Street really wanted Tesla dead,” he said, describing short sellers who profit when a stock falls in price.
He said short sellers spread false stories and that the practice should be made illegal.
Tesla shares closed about 5% higher at $133.42.
Earlier Friday, Tesla investor Timothy Fries told the jury that he lost $5,000 buying Tesla stock after Musk sent the tweet that sparked volatile swings in Tesla’s stock.
Fries said that for him “funding secured” meant that “there had been some reviews, some critical reviews of these funding sources”.
Musk’s attorney, Alex Spiro, told the jury in his opening statement on Wednesday that Musk believes he is being funded by Saudi donors and is taking steps to see the deal through. Fearing leaks to the media, Musk tried to protect the “ordinary shareholder” by sending out the tweet that contained “technical inaccuracies,” Spiro said.
Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s conduct in 2018 was “unprecedented” and “incoherent” in relation to the structuring of an enterprise agreement because he communicated with his intent without proper financial or legal analysis had gone public.
A jury of six men and three women will decide whether the tweet artificially inflated Tesla’s stock price by hyping the funding status for the deal, and if so, by how much.
The defendants include current and former Tesla directors, who Spiro said had “pure” motives in their response to Musk’s plan.
Reporting by Tom Hals in Wilmington, Delaware and Jody Godoy in San Francisco; Edited by Noeleen Walder, Peter Henderson, Matthew Lewis, Daniel Wallis and David Gregorio
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