Elon Musk is a universal genius. Nobody understands, at least according to Musk, more about car construction than Musk. He is an expert in rocket building and tunnel design, solar energy and social networks, cryptocurrency and flamethrowers, payment services and free speech. He’s so smart that while everything he says or writes on Twitter is always true, people don’t always get exactly what he means by that. There is no other way to explain what is currently happening at this court hearing in San Francisco.
As a reminder, Musk has been sued. Yes, he is constantly sued for defamation (he had called a caver “pedo guy” and was acquitted on the grounds that it was a harmless insult). Then because of the $56 billion package from Tesla (a verdict is still pending) or currently several times as Twitter boss because of unpaid bills. Or from former employees who are suing the circumstances of their layoffs. He is therefore also a universal defendant, which is why you have to specify exactly what is at stake every time.
Now, in San Francisco: around the electric car genius, the Tesla boss, who on August 7, 2018 at Twitter had written that he wanted to take the electric vehicle manufacturer off the stock exchange for $420 per share: “Financing secured”. Musk said the price was no joke. 420 is considered the code for marijuana use, in addition to his qualities as a businessman, Musk is also known for his idiosyncratic humor between dad jokes and schoolboy jokes: “I know that there is karma around 420 – although I’m now wondering if it was good or bad karma in that case.” He only added about 20 percent to the share price at the time: “I had no bad intentions. I wanted to do the right thing for all shareholders.”
The Tesla paper was worth 23 percent less at the time. The tweet initially caused the share price to soar; shortly afterwards, when it turned out that it probably wouldn’t work, the paper crashed. Overall, Tesla’s valuation has fluctuated in the $14 billion range on this rollercoaster ride. Numerous investors claim to have lost millions of dollars – and they claim that Musk deliberately manipulated the Tesla course with his testimony, the financing was not secured and Musk knew it.
Musk has already made a deal with the Securities and Exchange Commission
The trial has already lasted a week, it will take a little longer – but from Friday to Tuesday, Elon Musk sat on the witness stand, who of course is also a universal entertainer. It is a jury trial, which is often a grotesque spectacle, because it is not lawyers that have to be convinced, but in this case nine people. Musk had already reached an out-of-court settlement with the SEC, part of this deal: Musk resigned as CEO and paid $40 million. The SEC must not call Musk a fraud; but he may not claim to have been acquitted of the charge of fraud.
This trial is considered so interesting because the jury ultimately has to answer this very question: Did Musk knowingly cheat with this tweet or not? “I’ve been accused of making false statements that I’m a fraud,” Musk said. “This is outrageous.” Rather, according to Musk, so-called short selling, i.e. betting on falling share prices of a company, should be banned. Important: The trial isn’t about whether Musk actually intended to take Tesla private; it’s all about funding.
As mentioned at the beginning, it was very often about truth and interpretation, and Musk said on Friday, for example, that all his Twitter entries were true – but not necessarily contained the full truth, because not all the information was so brief Tweets could be accommodated. He also said that you shouldn’t necessarily see a connection between his tweets and Tesla’s stock price: he did tweet that Tesla’s price was too high; following this statement, the value of the paper had even increased. The truth: Musk wrote this on May 1, 2020; by the end of that day, Tesla stock was down 10 percent.
On Monday, Musk tried a different strategy, real estate genius and handshake negotiator. He claimed that a bank would grant you a loan to buy a house even if the conditions had previously only been agreed with a handshake. The talks with Yasir Al-Rumayyan, head of the Saudi Arabian investment fund Public Investment Fund, took place a week before his Twitter entry: “It’s reasonable to assume that you shake hands – and that’s it.” Al-Rumayyan got himself “Not keeping his word.”
Tesla board members will also testify this week
Plaintiffs’ attorney Nicholas Porritt said: “It may well be that she are able to buy a house without the written consent of the bank. Everyone else knows that they don’t need to make an offer without a written commitment.” Rather, it was the case that Al-Rumayyan asked for additional information about Tesla’s financial situation – and the deal, five percent of the shares in the electric car manufacturer to take over, then canceled, so the funding was by no means secured and Musk knew it.
“It wasn’t a problem; it was quite the opposite,” Musk said Tuesday. He said he could have sold shares in aerospace company Spacex to raise funds, and his lawyer presented documents from a Tesla board meeting a few days after the tweet in which the financial institution Goldman Sachs, with which Musk is preparing to withdraw from the Stock market worked, suggests that there are more than enough opportunities for financing. However, when prosecuted by plaintiff attorney Porritt, Musk said that there had been no written commitments and that, as Musk admitted, “no specific figures” had been discussed. It remains exciting, members of the Tesla board of directors will testify this week.
Musk is a genius, so of course he knew he shouldn’t make any public statements because of the ongoing proceedings – so he asked the waiting reporters as he left the courthouse: “I’m curious, what do you think?” When they don’t provide any information and ask if he thinks it went well, Musk just says, “I think so.”