SAN FRANCISCO (AP) — Elon Musk is back in federal court Monday in San Francisco, testifying that he believed he had locked in financial backing to take Tesla private during meetings in 2018 with representatives of Saudi Arabia’s Public Investment Fund — though no specific amount or price was discussed of funding.
The 51-year-old billionaire Tesla CEO and Twitter owner is facing a class-action lawsuit filed by Tesla investors who claim he misled them with a tweet saying funding had been secured to take it private his electric car company – for $420 per share.
But the deal never came close to happening, and the tweet led to a $40 million settlement with securities regulators.
The trial hinges on whether a pair of tweets posted by Musk on Aug. 7, 2018, harmed Tesla shareholders during the 10-day period leading up to Musk’s admission that the buyout he envisioned would not happen.
Speaking in a soft halting tone, Musk said Monday that he “had trouble sleeping last night and unfortunately I’m not at my best.” He added that it was important for jurors to know that he “felt that the funding was secured” because of his ownership “only of SpaceX stock.”
“Just like I sold Tesla stock to buy Twitter. … I didn’t want to sell Tesla stock, but I sold Tesla stock,” he said of the sale to make up for a lack of financing from other sources for his $44 billion deal to take Twitter private. Musk sold nearly $23 billion worth of stock in his auto company between last April, when he began building a Twitter presence, and December.
“My SpaceX shares alone would mean the funding is secured,” Musk said of the 2018 tweets.
Even before Musk took his first stand on Friday, U.S. District Judge Edward Chen said jurors could consider the two tweets false, leaving them to decide whether Musk intentionally misled investors and whether his statements burdened them with losses .
Musk previously claimed he entered into the SEC settlement under duress and maintained he believed he had secured financial backing to buy Tesla during meetings with officials from Saudi Arabia’s Public Investment Fund.
In a meeting on July 31, 2018, Yasir Al-Rumayyan of the Saudi Public Investment Fund “confirmed unequivocally that they would support Tesla going private. That was part of what “secure funding” meant, Musk said Monday. “But in addition, there were shares of SpaceX that could also be used.”
In the first of the 2018 tweets, Musk said financing had been “secured” for what would have been a $72 billion — or $420 per share — buyout of Tesla at a time when the electric car maker was still struggling with production issues and it was worth a lot less than it is now. Musk followed up a few hours later with another tweet suggesting a deal was imminent.
Nicholas Porritt, a lawyer representing Tesla shareholders, asked Musk if he “picked the 420 because it was a prank your girlfriend enjoys.” Musk responded that he thought there was “some karma” around the number 420 — which is also a slang reference to marijuana — though he added that he didn’t know “whether it’s good karma or bad karma at this point.”
He then said the number was a “coincidence” and represented a 20% premium to Tesla’s stock price at the time.
After it became clear that the money was not available to take Tesla private, Musk stepped down as Tesla’s chairman while remaining CEO as part of a settlement with the SEC without admitting wrongdoing.
On Friday, Musk testified that he thought it was possible to be “absolutely honest” on Twitter. “But can you be comprehensive? Of course not.”
On Monday, he reiterated: “My tweet was true, absolutely true.”
Asked by his lawyer, Alex Spiro, if he understood the charges against him, Musk said he was “accused of fraud. This is outrageous.”
Tesla shares rose $8.76. or 6.6%, to $142.18 on Monday. He said he never defrauded investors.
AP technology writer Matt O’Brien contributed to this story.