Musk, Tesla and other Tesla directors are facing a shareholder lawsuit over his now-infamous 2018 tweet that said he was considering privatizing Tesla at a price of $420 per share.
A four-year-old tweet by Elon Musk has the Tesla CEO back in court as of Tuesday.
If he ended the tweet right there, there would have been no coverage or a lawsuit seeking unspecified damages, CNN reports.
But he closed it with two words that caused Musk to pay millions of dollars in fines and legal fees: “Funding secured.”
It turns out that while Musk had spoken to Saudi sovereign wealth fund executives about the money he would need to take Tesla private, the funding was far from “secured.”
I’m considering taking Tesla private for $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Tesla shares initially surged 11% on the day of his original tweet, but they never reached the promised $420 level, peaking at $387.46 on the day. And they soon fell well below their pre-tweet price of $344, hitting $263.24 a month later when it became clear that funding was far from secure, leading to the shareholder lawsuit, which ended just after more than four years in court.
A turn from losses to gains about a year after the Tesla tweet
(TSLA) shares have had an exceptional run, gaining 1520% since the day of the tweet to their all-time high set in November 2021. That record close of $409.97 equates to $6,150 per share if you factor in the two stock splits since that day. Despite Tesla’s 70 percent drop
(TSLA) stock from that all-time high through Friday’s close, shares are still up 384% since the close on the day of the tweet in 2018.
Musk later said he only agreed to the settlement because continuing the fight would have resulted in the banks cutting off the funding Tesla needed to survive, which then lost money and faced a liquidity crisis. In comments at a TED conference last year, he likened negotiating with the SEC to someone pointing a gun at their child’s head.
But despite his claims to have secured the funding, federal judge Edward Chen, who is hearing the case beginning Tuesday, said in a ruling last April that “no reasonable jury reviewed Musk’s tweets of Musk’s and other defendants’ 7 motion to dismiss the case.” dismiss the process.
“A potential juror who already finds that Mr. Musk is using Twitter inappropriately or is not honest in his application is unlikely to extract that bias from his assessment of the evidence in this case and render an impartial judgment,” Musk’s attorneys argued in the application to postpone the proceedings. Musk’s attorneys said polls of 200 prospective jurors found 116 already had a negative opinion of Musk and only 26 had a positive opinion of him.
“The jury questionnaires confirm that the jury in this district is biased against Mr. Musk, that much of the bias is directly related to issues in this case (namely, Mr. Musk’s use of and honesty on Twitter) and that whatever kind basis previously existed has been fueled and emphasized by media coverage of recent events,” his lawyers said in the filing. “These numbers make it clear that an impartial juror from this jury pool is not feasible.”