A U.S. jury on Friday found Tesla Chief Executive Elon Musk and his company not liable for misleading investors, Reuters reported. The decision comes after Musk tweeted in 2018 that he had raised money to take the company private.
Am considering taking Tesla private at $420. Funding secured.— Elon Musk (@elonmusk) August 7, 2018
Tesla shareholders are seeking billions of dollars in damages in a case accusing Musk of tweeting fraud. The decision was also important to Musk himself, who has vigorously defended his ability to tweet widely. The jury returned its verdict about two hours after it began deliberating.
Thank goodness, the wisdom of the people has prevailed!— Elon Musk (@elonmusk) February 3, 2023
I am deeply appreciative of the jury’s unanimous finding of innocence in the Tesla 420 take-private case.
Tesla shareholders claimed that Musk misled them with his Aug. 7, 2018, tweet. Musk tweeted at that time that he was considering taking the company private at $420 per share, a premium of about 23 percent over the previous day's closing price, and that "funding is already in place." Tesla shareholders said Musk lied when he said on Twitter later that day that "investor support is confirmed.
Tesla shares spiked after the tweet, but fell again after Aug. 17, 2018, when it became clear the takeover would not happen. top CARS has learned that an economist hired by Tesla shareholders calculated that investors lost up to $12 billion.
Musk spent nearly nine hours on the witness stand during the three-week trial, telling jurors he believed Twitter was real. He said he had arranged the necessary financing, including a verbal commitment from Saudi Arabia's sovereign wealth fund, the Public Investment fund. Musk said the fund later reneged on its promise.
Musk later testified that he believed he could sell enough shares of rocket company SpaceX to fund the acquisition and that he "felt financially secure" on the basis of SpaceX stock alone. Musk also said he sent the tweets to put minority shareholders on the same footing as large investors who knew about the deal. But he acknowledged that he had no formal commitment from the Saudi fund and other potential backers.
Musk noted that his tweets in general have not always affected Tesla's stock as much as he expected. "Just because I post something on Twitter doesn't mean people will believe it or act accordingly."
Musk's lawyer, Spiro, said Musk's "funded" tweet was "technically inaccurate," but that investors were only interested in whether Musk was considering an acquisition. "Just because it's a bad tweet doesn't make it fraudulent," he said in closing arguments.