Elon Musk Testifies Intent to Sell SpaceX Stock in 2018 to Facilitate Tesla’s Going Private
Elon Musk appeared in a San Francisco federal court Monday, affirming that it would have been possible for him to sell stakes in SpaceX as a means of funding a possible offer to take Tesla private in 2018. He was, as still is, the CEO and biggest shareholder of both companies.
The tech magnate is currently facing a lawsuit initiated by Tesla shareholders concerning a series of tweets he sent out in August 2018 declaring that he had "secured financing" to make the automobile manufacturer private, with investor backing "affirmed" at $420 per share. This prompted the suspension of trading in Tesla shares, with the stock's value continuing to be volatile for many weeks after.
The certified class action lawsuit alleges that the tweets posted by Musk were irresponsible and false, leading shareholders to make wrong investment choices which resulted in huge losses. Musk had claimed that he had a verbal agreement from Saudi Arabia’s sovereign wealth fund, and that he was sure the deal comprising of his proposed price would succeed. Nevertheless, the agreement never came through.
On his second day on the witness stand, Musk stated that another explanation for why he mentioned that the "funding was secured" in 2018 was the fact that he could have sold some of his SpaceX stock to finance the deal. He declared under oath that the SpaceX stocks alone would have been enough to guarantee the funding. He furthermore added that he sold Tesla stock to cover the cost of the Twitter transaction and that he would have followed the same approach for this particular transaction.
In April 2018, SpaceX revealed in a disclosure with the Securities and Exchange Commission that it had acquired about $214 million as part of an investment round aiming for more than $500 million in total equity funding. No details were given by Musk regarding how many shares of his reusable rocket maker he would have been able to sell, to whom and at what price in order to finance the Tesla buyout.
An attorney for the shareholders, Nicholas L. Porritt of Levi & Korsinsky, inquired of Musk whether the figure he suggested for Tesla shares was a joke owing to the fact that 420 is a reference to cannabis in popular culture.
Musk denied it had been done intentionally. He stated, “There is some, I reckon, karma surrounding 420... I should contemplate whether this is positive or negative karma currently.”
Musk has had previous experience with legal action in relation to his tweets. He and Tesla were charged with civil securities fraud by the SEC after he posted certain tweets, for which they each paid fines of $20 million. This then led to an adjusted consent decree that necessitated Musk to take some time away from his role as Tesla's chairman and have any tweets that contained meaningful business information about the company go through a securities lawyer before they were posted.
In October 2022, Elon Musk successfully led a leveraged buyout of Twitter for a total cost of $44 billion, cementing his position as the company's CEO. Following this, Saudi Prince Alwaleed bin Talal bin Abdulaziz has become the social media giant's second-largest shareholder after Musk. In response, Senator Chris Murphy of Connecticut sent a letter to the Committee on Foreign Investment in the United States requesting an investigation of the financing of Musk's acquisition of Twitter.
The tech magnate is currently facing a lawsuit initiated by Tesla shareholders concerning a series of tweets he sent out in August 2018 declaring that he had "secured financing" to make the automobile manufacturer private, with investor backing "affirmed" at $420 per share. This prompted the suspension of trading in Tesla shares, with the stock's value continuing to be volatile for many weeks after.
The certified class action lawsuit alleges that the tweets posted by Musk were irresponsible and false, leading shareholders to make wrong investment choices which resulted in huge losses. Musk had claimed that he had a verbal agreement from Saudi Arabia’s sovereign wealth fund, and that he was sure the deal comprising of his proposed price would succeed. Nevertheless, the agreement never came through.
On his second day on the witness stand, Musk stated that another explanation for why he mentioned that the "funding was secured" in 2018 was the fact that he could have sold some of his SpaceX stock to finance the deal. He declared under oath that the SpaceX stocks alone would have been enough to guarantee the funding. He furthermore added that he sold Tesla stock to cover the cost of the Twitter transaction and that he would have followed the same approach for this particular transaction.
In April 2018, SpaceX revealed in a disclosure with the Securities and Exchange Commission that it had acquired about $214 million as part of an investment round aiming for more than $500 million in total equity funding. No details were given by Musk regarding how many shares of his reusable rocket maker he would have been able to sell, to whom and at what price in order to finance the Tesla buyout.
An attorney for the shareholders, Nicholas L. Porritt of Levi & Korsinsky, inquired of Musk whether the figure he suggested for Tesla shares was a joke owing to the fact that 420 is a reference to cannabis in popular culture.
Musk denied it had been done intentionally. He stated, “There is some, I reckon, karma surrounding 420... I should contemplate whether this is positive or negative karma currently.”
Musk has had previous experience with legal action in relation to his tweets. He and Tesla were charged with civil securities fraud by the SEC after he posted certain tweets, for which they each paid fines of $20 million. This then led to an adjusted consent decree that necessitated Musk to take some time away from his role as Tesla's chairman and have any tweets that contained meaningful business information about the company go through a securities lawyer before they were posted.
In October 2022, Elon Musk successfully led a leveraged buyout of Twitter for a total cost of $44 billion, cementing his position as the company's CEO. Following this, Saudi Prince Alwaleed bin Talal bin Abdulaziz has become the social media giant's second-largest shareholder after Musk. In response, Senator Chris Murphy of Connecticut sent a letter to the Committee on Foreign Investment in the United States requesting an investigation of the financing of Musk's acquisition of Twitter.
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