What you should know about the trial launch over Elon Musk’s tweets about Tesla

SAN FRANCISCO (Reuters) – While still dealing with the fallout from a private venture, ailing billionaire Elon Musk is now facing a lawsuit for a venture he never had.

Long before Musk paid $44 billion for Twitter in October, he had his sights set on Tesla, the electric vehicle company he still runs and from which he draws the majority of his fortune and renown.

CONTINUE READING: Elon Musk says Twitter’s restriction on political advertisements will be lifted.

Musk stated in an August 7, 2018 tweet that he had secured funds for a $72 billion purchase of Tesla, which he then followed up with a statement that made a transaction look imminent.

However, the transaction never occurred, and Musk is now required to explain his conduct under oath in federal court in San Francisco. The trial, which begins with jury selection on Tuesday, is the result of a class action complaint filed on behalf of investors who owned Tesla shares for 10 days in August 2018.

Musk’s tweets at the time prompted a spike in Tesla’s stock price, which ended suddenly a week later when it was revealed that he didn’t have the finances to execute the acquisition after all. As a result, he abandoned his proposal to take the automobile private, resulting in a $40 million settlement with US securities authorities, as well as his resignation as chairman of the firm.

Musk has now claimed that he entered the deal under duress, saying that he obtained financial backing for a Tesla purchase in talks with officials from Saudi Arabia’s Public Investment Fund.

CONTINUE READING: Elon Musk tweets that he will stand down as CEO of Twitter if a replacement is found.

The jury’s assessment of Musk’s motivation for tweets, which US District Judge Edward Chen has already found false, might determine the result of the trial.

Chen delivered Musk another setback on Friday, declining Musk’s request to relocate the trial to a federal court in Texas, where Tesla plans to relocate its headquarters in 2021. Musk claimed that unfavourable media coverage of his Twitter purchase tainted the San Francisco Bay Area jury.

Musk’s leadership of Twitter, where he has laid off workers and alienated users and advertisers, has angered Tesla’s existing shareholders, who believe he has spent less time leading the carmaker during a period of rising competition. These fears contributed to a 65 percent drop in Tesla shares over the last year, wiping away more than $700 billion in shareholder value — significantly more than the $14 billion wealth reversal that occurred between the company’s peak and low stock prices from August 7 to 17, 2018.

The case is premised on the notion that if Musk had not floated the prospect of purchasing the firm at $420 per share, Tesla shares would not have traded in such a broad range. Since then, Tesla stock has split twice, and the $420 price is now worth $28 on an adjusted basis. Last Friday, shares ended at $122.40, down from their split-adjusted high of $414.50 in November 2021.

CONTINUE READING: Journalists who wrote about Tesla CEO Elon Musk have been barred from using Twitter.

After Musk abandoned the notion of a Tesla takeover, the business fixed a production difficulty, resulting in a quick increase in vehicle sales that drove its stock flying and made Musk the richest person on the planet until he purchased Twitter. Musk dropped to the bottom of the asset list following a stock market outcry for his activities with Twitter.

The witness list for Musk’s trial includes some of Tesla’s current and past top executives and board members, including luminaries like Larry Ellison, co-founder of Oracle, and James Murdoch, son of Tesla media magnate Rupert Murdoch. The drama might also shed light on Musk’s relationship with his brother Kimbal, who is also on the list of prospective witnesses expected to be called during the trial, which is scheduled to continue until February 1.

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