SAN FRANCISCO, Jan 20 (Reuters) – Elon Musk, chief executive of Tesla Inc (TSLA.O), said on Friday that investors did not always react to his Twitter posts as he expected, defending himself in a lawsuit for fraud regarding his 2018 tweet that he had funds to privatize the electric car maker.
Musk’s testimony began with questions about his use of Twitter, the social media platform he purchased 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 will act on it,” Musk told the jury in San Francisco federal court.
Musk testified for less than 30 minutes before the court adjourned until Monday and was not asked about his 2018 tweet that he was considering taking Tesla private and had “secured funding”.
He should explain 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 a rare securities class action lawsuit and plaintiffs have already cleared significant legal hurdles, with U.S. Judge Edward Chen ruling last year that Musk’s funding post was untruthful and reckless.
Shareholders alleged Musk lied when he sent the tweet, costing investors millions.
Musk, dressed in a dark suit over a white button-up shirt, spoke quietly and in a sometimes puzzled manner, a contrast to his occasional combative testimony at previous trials.
Musk described the difficulties faced by the company when he sent the “funding secured” tweet, including bets by short sellers on the stock’s fall.
“A bunch of sharks on Wall Street wanted Tesla dead, very badly,” he said, describing short sellers, who profit when a stock’s price drops.
He said short sellers fabricate false stories and the practice should be made illegal.
Shares of Tesla ended about 5% higher at $133.42.
Earlier on Friday, Tesla investor Timothy Fries told the jury he lost $5,000 buying Tesla stock after Musk sent the tweet, which triggered volatile swings in Tesla stock. .
Fries said that “the funding obtained” meant to him that “there had been a verification, a critical examination of these sources of funding”.
Musk’s attorney, Alex Spiro, told the jury in his opening statement on Wednesday that Musk believed he had funding from Saudi backers and was taking steps to complete the deal. Fearing media leaks, Musk tried to protect “the ordinary shareholder” by sending the tweet, which contained “technical inaccuracies”, Spiro said.
Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s behavior in 2018 was ‘unprecedented’ and ‘inconsistent’ in terms of structuring a corporate deal because he made his intention public without proper financial or legal analysis.
A jury of six men and three women will decide whether the tweet artificially inflated Tesla’s share price by playing on the status of the deal’s financing, and if so, by how much.
The defendants include current and former Tesla executives, 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; Editing by Noeleen Walder, Peter Henderson, Matthew Lewis, Daniel Wallis and David Gregorio
Our standards: The Thomson Reuters Trust Principles.