During his testimony, Elon Musk said that he indeed had support from Saudi investors who later backpedaled from their commitment.
On Monday, January 23, Tesla chief Elon Musk testified before the jurors adding that he indeed had support from Saudi’s sovereign wealth fund for taking Tesla private. Besides, he also spoke about using his own share in his space rocket company SpaceX to fund this buyout.
During his trial in the San Francisco federal court, the billionaire shared details about the matter. “With SpaceX stock alone, I felt funding was secured” for the buyout, said Musk.
But Nicholas Porritt, the plaintiff investors’ lawyer raised doubts over whether Musk was looking to use his SpaceX stake to fund the deal. Well, such a move would have certainly increased his stake in Tesla. As per Porritt, back then in 2018, Musk told Tesla employees that he expects his stake to remain the same in the company.
On August 7, 2018, Elon Musk tweeted that he had “funding secured” to take Tesla private at $420 a share. The plaintiff has accused Musk of defrauding investors by making unrealistic claims. However, Musk has been defending his position in the matter that he had received financial interest from Saudi investors.
But Musk also said that he chose not to take Tesla private citing a lack of support from investors and was thus willing to avoid the lengthy process. The case revolves around Musk’s open disclosures on Twitter with allegations of trying to manipulate the stock price.
Details of the Tesla Case
Soon after Elon Musk’s August 2018 tweets, the Tesla stock price surged making it clear that the buyer would not happen. Investors said that they lost millions of dollars as a result.
Responding to Porrit, Musk said that he had met representatives of Saudi Arabia’s sovereign wealth fund at Tesla’s factory in Fremont, California. Although the takeover price wasn’t discussed, the Saudi representatives made it clear that they would do whatever it required to make a buyout happen.
However, this never came to fruition as Musk explained that the fund’s governor, Yasir Al-Rumayyan, had later backstopped his commitment to take Tesla private. “I was very upset because he had been unequivocal in his support for taking Tesla private when we met and now he appeared to be backpedaling,” Musk testified.
However, Porrit has argued that the written evidence doesn’t support Musk’s claims of Saudi’s original intentions. Now, a jury of nine will be deciding whether the Tesla CEO artificially inflated the stock price by touting buyout prospects.
However, during his testimony, Musk categorically pointed out the language used wherein he was saying “not that it will happen, but that I am thinking about it,” and that it was his “opinion” that funding was secured.
Elon Musk vs SEC
The US Securities and Exchange Commission (SEC) has also sued Elon Musk asking for a $40 million in combined settlement for him and Tesla. The SEC also accused Musk of rounding off the buyout at $420 per share instead of $419 since he learned about the higher amount’s “significance in marijuana culture” and that his girlfriend would find it funny.
However, Musk has denied it adding:
“It was chosen because it was a 20% premium over the stock price. The $420 price was not a joke.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
