Tesla CEO, Elon Musk, is set to face a trial on Tuesday over a tweet he posted in 2018 that stated he would take Tesla private in a $72bn buyout. The lawsuit is being brought against Musk by Tesla shareholders, who claim that he manipulated the share price of the company.
In August 2018, Musk tweeted that he had “funding secured” to take the electric carmaker private. However, it later emerged that the funding was not secured and Tesla was not taken private. Shareholders argue that they lost billions of dollars due to the tweet after the share price plummeted. He wrote in the post:
“Am considering taking Tesla private at $420. Funding secured.”
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk, however, maintains that he believed he had secured funding from Saudi Arabia’s Investment Fund and did not commit securities fraud. Depending on how the trial goes for Musk, he may end up having to pay billions in damages, keeping in mind that he has already paid $20 million to the Securities Exchange Commission (SEC) for posting the Tweet and Tesla had to pay an additional $20 million for it as well.
The post has highlighted the significant impact that a single tweet can have. Legal experts believe it will be a difficult case for Musk to win and that the fine he paid to the SEC will be used against him in the case. However, jury trials in cases of fraud are notoriously difficult to predict.
The trial will be going ahead in San Francisco on Tuesday, despite Musk’s efforts to get it moved to Texas away from where he fired around half of the Twitter workforce in San Francisco. The judge did not agree with this so it will be going ahead as planned.