Elon Musk told jurors on Monday he was sure he had locked up financial support from Saudi investors in 2018 to take his electric car maker Tesla Inc private, and could even have used his stake in rocket company SpaceX to fund a buyout.
At a trial in San Francisco federal court, the billionaire, who said he was tired from a lack of sleep, spoke quietly and calmly during roughly five hours of testimony.
“With SpaceX stock alone, I felt funding was secured” for the buyout, he told a jury, referring to the aerospace company where he is also CEO, without giving any details.
But Nicholas Porritt, the plaintiff investors’ lawyer, raised doubts about whether he had been looking to use his SpaceX stake to fund the deal, which would have increased his stake in Tesla. Porritt pointed out that Musk had told Tesla employees at the time he expected his stake in Tesla to remain similar after the deal.
Musk is defending against claims that he defrauded investors by tweeting on Aug. 7, 2018, that he had “funding secured” to take Tesla private at $420 per share, and that “investor support is confirmed.” Musk added later that he chose not to take Tesla private due to a lack of support from some investors and a wish to avoid a lengthy process.
The trial tests Musk’s penchant for taking to Twitter to air his sometimes irreverent views, and when the world’s second-richest person can be held liable for crossing a line.
Tesla’s stock price surged after Musk’s 2018 tweets, only to fall as it became clear the buyout would not happen. Investors say they lost millions of dollars as a result.
Musk told Porritt that he met on July 31, 2018, with representatives of Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, at Tesla’s factory in Fremont, California.
He acknowledged that a takeover price was not discussed, but said the Saudi representatives made clear they would do what it took to make a buyout happen.
That never came to pass, Musk said, because the fund’s governor, Yasir Al-Rumayyan, later backpedaled on the commitment to take Tesla private.
“I was very upset because he had been unequivocal in his support for taking Tesla private when we met and now he appeared to be backpedaling,” Musk testified.
Lawyers for Al-Rumayyan did not immediately return a request for comment.
Porritt later told the court that written evidence did not support Musk’s claim about the Saudis’ original intentions, saying that minutes of their meeting showed that the Saudis wanted to learn more about what Musk had in mind.
Musk later testified that he would have sold his stake in SpaceX to fund the go-private deal, as he sold part of his Tesla stake to help fund his bid to take Twitter private last year.
He is expected to continue on Tuesday with a third day of testimony.
‘NOT A JOKE’
A jury of nine will decide whether the Tesla CEO artificially inflated the company’s share price by touting the buyout’s prospects, and if so by how much.
Musk testified that when tweeting about the financing, he was saying “not that it will happen, but that I am thinking about it,” and that it was his “opinion” that funding was secured.
U.S. Judge Edward Chen ruled last May that Musk’s post was untruthful and reckless.
Musk has also been sued by the U.S. Securities and Exchange Commission over the tweets, leading to a combined $40 million in settlements for him and Tesla and a requirement that a Tesla lawyer screen some of his tweets in advance.
The SEC had alleged that Musk rounded the alleged buyout offer to $420 per share from $419 because he had recently learned about the higher amount’s “significance in marijuana culture” and thought his girlfriend would find it funny.
Musk denied having thought that.
“It was chosen because it was a 20% premium over the stock price,” he testified. “The $420 price was not a joke.”
He began testifying on Friday, telling jurors that while Twitter, which he bought in October, was the most democratic way to communicate, his tweets did not always affect Tesla stock the way he expects.
“Just because I tweet something does not mean people believe it or will act accordingly,” Musk said.
The defendants also include current and former Tesla directors, whom Musk’s lawyer Alex Spiro said had “pure” motives in their response to Musk’s plan.