A jury has cleared Elon Musk of liability in an investor lawsuit related to some 2018 tweets about taking Tesla private. Musk had said that the funding was in place to take it private and a deal was “imminent.” Musk had mentioned that he could take Tesla private for $420 a share. The deal would have cost up to $70 billion.
420 is a slang term for use of marijuana – something that Musk famously did during an appearance on Joe Rogan’s podcast, though he is rarely seen in public smoking a joint.
The investors alleged that the tweets amounted to illegal manipulation of stock value. Musk had even advised not selling Tesla stock under $420 before the deal to take it private went through.
The jury’s ruling does not mean U.S. District Judge Edward Chen, who presided over the trial, did not have some sharp words for Musk. He considered the tweets to be falsehoods, especially considering that Tesla never went private. The stock, which goes by ticker symbol TSLA, is still publicly traded.
As of the evening of February 4, 2023, TSLA was at $189.98 per share after a roller-coaster 2022. Last year’s drama included Musk’s tumultuous takeover of Twitter and increasing doubts about Musk’s ability to even manage a company that had been added to the S&P 500 at one point. Not that Tesla had a terrible year: It finally got its Gigafactories in Texas and Germany open, delivered the first Semis to Pepsico, and continues to stay strong on vehicle deliveries. However, investors might have reason to doubt its CEO’s erratic behavior, which may have started before he closed the Twitter deal.
The investors’ attorney, Nicholas Porritt, expressed disappointment with the ruling: “I don’t think this is the kind of conduct we expect from a large public company. … People can draw their own conclusion on whether they think it’s OK or not.”
Porritt had argued that Musk’s tweets amounted to reckless behavior that encouraged “anarchy” during closing arguments.
However, Musk’s attorneys argued that Musk genuinely believed that he had a commitment from Saudi Arabia’s Public Investment Fund despite lack of written proof. This Public Investment Fund is one of the largest sovereign wealth funds in existence, with $430 billion in investments as of October 2021. He may have erred in believing promises made by someone within the Saudi Arabian Public Investment Fund and making his tweets before he had anything more than a verbal commitment. His lawyers attempted to convince the jurists that he was just looking out for smaller shareholders who don’t have the financial clout of big institutional investors – and might get most of their news from online sources like Twitter.
“He was trying to include the retail shareholder, the mom and pop, the little guy, and not seize more power for himself,” his attorney, Alex Spiro, told jurists. “Just because it’s a bad tweet doesn’t make it a fraud.”
With the verdict in, Musk may be off the hook for billions in dollars in liability. He had sit in on the closing arguments even though his presence was not required. A sketch of Musk created by a courtroom artist showed him wearing a mask and watching stoically. Was it a strategic move when he could have been spending the time working at one of the companies he heads? Well, as formal federal prosecutor Michael Freedman said of his possible influence on jurists, “It shows he has a presence.”