Elon Musk, the CEO of Tesla (NASDAQ:TSLA) Inc., said in court on Friday that investors don’t always react to his tweets the way he thinks they will. He said this to defend himself in a fraud trial over a tweet he sent in 2018 saying he had the money to take the electric car company private.
Musk’s testimony started out with questions about how he uses Twitter, which he bought in October. He said it was the most democratic way to talk to people, but he also said that his tweets didn’t always have the effect on Tesla stock that he was hoping for.
Musk told the jury in San Francisco federal court, “Just because I tweet something doesn’t mean people will believe it or act on it.”
Musk testified for less than 30 minutes before the court recessed until Monday. He was not asked about his tweet from 2018 that he was thinking about taking Tesla private and that he had “funding secured.”
He is expected to address why he has insisted he had Saudi investor backing to take Tesla private, which never occurred, and whether he knowingly made a materially misleading statement with his tweet.
The case is a rare securities class action trial, and the plaintiffs have already cleared high legal hurdles, with U.S. Judge Edward Chen ruling last year that Musk’s funding post was untruthful and reckless.
Shareholders allege that Musk lied when he sent the tweet, costing investors millions.
Musk, wearing a dark suit over a white button-down shirt, spoke softly and in a sometimes bemused manner, a contrast to his sometimes combative testimony in past trials.
Musk described the difficulties the company went through around the time he sent the “funding secured” tweet, including bets by short-sellers that the stock would fall.
“A bunch of sharks on Wall Street wanted Tesla to die, very badly,” he said, describing short-sellers, who profit when a stock’s price falls.
He said that short sellers make up false stories and that this should be against the law.
Shares of Tesla finished the day up about 5%, at $133.42.
Tim Fries, a Tesla investor, told the jury earlier on Friday that he lost $5,000 when he bought Tesla stock after Musk’s tweet, which caused wild swings in the stock price.
Fries said that “funding secured” meant to him that “those sources of funding had been critically looked at.”
In his opening statement to the jury on Wednesday, Alex Spiro, Musk’s lawyer, said that Musk thought he had money from Saudi backers and was taking steps to make the deal happen. Musk sent the tweet, which had “technical inaccuracies,” because he was afraid of leaks to the media. He was trying to protect the “everyday shareholder.”
A Harvard Law School professor named Guhan Subramanian told the jury that Musk’s actions in 2018 were “unprecedented” and “incoherent” in terms of how he set up a business deal, since he made his plans public without doing the right financial or legal research.
A jury of six men and three women will decide if the tweet inflated Tesla’s share price by playing up the status of funding for the deal and, if so, by how much.
The defendants include current and former Tesla directors, whom Spiro said had “pure” motives in their response to Musk’s plan.