When Elon Musk posts on Twitter about Tesla, he must follow federal laws related to social media, the mega-billionaire revealed in court testimony on Friday.
But just because he tweeted something, he said, “doesn’t mean people are going to believe it, or act on it.”
And although he said his tweets were true, “you can be honest, but can you explain? Of course not.”
Musk’s argument is tied to another lawsuit, one of which is a class action filed by Tesla shareholders who say they were financially harmed by a tweet on August 7, 2018 Musk in which he said he “financed money” to take the private company to $ 420 a share – which indicated a transaction worth about $ 80 billion.
In the weeks that followed these Musk’s tweets, Tesla stock shot up and down to $ 14 billion, causing many investors who bought the deal to lose money.
Some of those hit hard were short sellers, an investment strategy that assumes a stock’s price is too high and makes money from its decline. Asked about those investors, Musk called short selling “bad” and said the practice should be banned.
Musk rejected the idea that there should be a connection between his tweets and Tesla’s price. He testified that he recalled a time when he tweeted that he thought Tesla’s stock price was too high, and instead of going down, it went up. (Musk tweeted that idea on May 1, 2020; at the close of the trading day, shares lost more than 10% of their value.)
Musk’s testimony lasted only 30 minutes before the trial was adjourned. He will appear again on Monday morning.
Prior to Musk’s testimony, a Harvard business professor called by the plaintiffs as an expert witness opined that the whole thing was an egregious example of “capitalism.”
The professor, Guhan Subramanian, based his testimony on studies of more than 60 sales professionals, also known as sales management. He called Musk’s proposal, true or not, “something more.” He used the words “imperfect,” “primitive,” “uncertain,” and “false.” Almost no CEO will publicly announce a deal until a long process – lasting weeks or months – involving a special committee of the board of directors, lawyers, bankers, investors and finally completed, said Subramanian. “You want the Board of Directors to manage this, not the CEO.”
Although Musk’s reputation for wild tweeting has been established (he previously called a critic of his “pedo” from his Twitter account, which led to a defamation lawsuit against him in 2019 that won Musk) the board has not yet created a record to protect it. protect the company from the consequences of his tweets. The Board of Directors did not address the issue until nearly a week after the “funding confirmed” tweet. “The lack of barriers is very troubling because of the lack of proper management,” Subramanian said.
Meanwhile, Musk’s lawyers have argued that Musk sometimes uses “wrong words” when he tweets. On Friday, they focused on another tweet that came after the “funding confirmation” message in which Musk discussed allowing existing Tesla shareholders to own a portion of the private company.
Those words, Musk’s lawyers said, indicated the sale was not complete.