SAN FRANCISCO (AP) — Elon Musk was portrayed on Wednesday as either a liar who recklessly gambled with the savings of “ordinary people” or a well-intentioned visionary as attorneys made opening statements in a lawsuit centered on a Tesla acquisition , which never took place.
Lawyers on opposing sides drew the vastly different portraits of Musk for a nine-person jury that will hear the three-week trial. The case centers on two August 2018 tweets the billionaire posted on Twitter, which he now owns.
The tweets suggested that Musk had been preparing funding for Tesla’s privatization at a time when the automaker’s shares were plummeting due to manufacturing issues.
The prospect of a $72 billion takeover led to a rally in the company’s share price that ended abruptly a week later after it emerged that he didn’t have the funds to go through with the deal after all. Tesla shareholders then sued him, saying Tesla stock wouldn’t have fluctuated in value so much if he hadn’t had the idea of buying the company at $420 a share.
Nicholas Porritt, an attorney representing Glen Littleton and other Tesla shareholders in the class action lawsuit, promptly defamed Musk when addressing the jury.
“Why are we here?” asked Porritt. “We are here because Tesla Chairman and Chief Executive Elon Musk lied. His lies caused ordinary people like Glen Littleton to lose millions and millions of dollars.” He also claimed that Musk’s tweet also hurt pension funds and other organizations that owned Tesla stock at the time.
Musk’s attorney, Alex Spiro, countered that the rise in Tesla stock following the tweet largely reflected investors’ belief in Musk’s ability to deliver mind-blowing feats, including building the world’s largest electric carmaker while operating SpaceX, a maker of rocket ships.
“Mr. Musk is trying to do things that have never been done before. Everyone knows that,” Spiro told the judges.
Spiro added that Musk was in advanced talks with officials from the Public Investment Fund of Saudi Arabia to take Tesla private.
“He wasn’t planning on tweeting that,” Spiro said of Musks August 7, 2018, Statement at the heart of the process. “It was a split-second decision” aimed at making talks with the Saudi fund as transparent as possible about a potential deal.
After saying “funding secured” for the acquisition, Musk followed up with another tweet that suggested a deal was imminent.
Littleton, a 71-year-old investor from Kansas City, Missouri, was the first witness called to the stand. He said Musk’s claim about funding alarmed him because he bought Tesla investments to reward him for believing that the automaker’s stock would eventually be worth well over the $420.
He said he sold most of his holdings to cut his losses, but the value of his Tesla portfolio still plummeted 75%.
“The damage was done,” Littleton lamented. “I was in shock.”
Littleton’s frustration escalated in October 2018 when he attacked Tesla for delaying delivery of vehicles for some of his nieces and nephews. That led to him becoming a key investor in the lawsuit.
“I still believe in Tesla to this day. I do,” Littleton said.
During cross-examination, an attorney for Tesla’s board of directors repeatedly questioned whether Littleton had reasonable grounds for believing a buyout was inevitable, but the investor stood firm, even if he appeared confused at times.
“‘Securing funding’ was the only thing that mattered to me,” Littleton testified. “That was such a formative statement.”
Musk’s 2018 tweets caught the attention of securities regulators, who concluded they were inappropriate and that he was lying. In a settlement, they forced him to pay $40 million and asked him to resign as Tesla chairman.
US District Judge Edward Chen, who is presiding over the trial, ruled that the shareholders’ attorneys cannot mention the settlement in the case.
But Chen has already ruled that Musk’s tweet was false, a finding that may be alluded to during the trial without specifically mentioning the judge’s decision. Pollitt took the opportunity during his opening remarks and told the jury to assume Musk’s tweet was false, as the judge allowed. Spiro shook his head as he listened.
The outcome of the trial could affect the jury’s interpretation of Musk’s motive for the tweets. And Musk will have his chance to plead his case before the jury.
After Wednesday’s trial was adjourned, Porritt told The Associated Press he hopes to call Musk to the witness stand if the trial resumes on Friday after two more witnesses testified. If the allotted time expires on Friday, Musk is likely to testify on Monday, Porritt said.
Musk’s stewardship of Twitter — where he has eviscerated employees and alienated users and advertisers — has proved unpopular with Tesla’s current shareholders, who are concerned he has devoted less time to the automaker at a time of increased competition.
Those concerns contributed to a 65 percent drop in Tesla stock over the past year that wiped out more than $700 billion in shareholder wealth — far more than the $14 billion swing between the high and low stock prices of the company Company took place on August 7, 2018 through August 17, 2018, the period covered by the Complaint.
Tesla stock has split twice since then, so the $420 price quoted in its 2018 tweet is now worth $28 on an adjusted basis. The stock closed at $128.78 on Wednesday, down from the company’s split-adjusted November 2021 peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame a manufacturing problem, leading to a rapid upswing in auto sales that sent its stock skyrocketing and made Musk the richest person on earth until he bought Twitter. Musk fell from the top of the asset list after a backlash in the stock market over his dealings with Twitter.