Trial over Elon Musk’s Tesla tweets begins Tuesday : NPR



Tesla CEO Elon Musk, pictured at a German factory in March 2022, is on trial this week for a series of 2018 tweets in which he teased a Tesla acquisition that never materialized.

Patrick Pleul/AFP via Getty Images


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Patrick Pleul/AFP via Getty Images


Tesla CEO Elon Musk, pictured at a German factory in March 2022, is on trial this week for a series of 2018 tweets in which he teased a Tesla acquisition that never materialized.

Patrick Pleul/AFP via Getty Images

In 2018, before Elon Musk made headlines for his role in running Twitter, he made headlines for another Twitter-related controversy: allegedly using the platform to commit fraud.

At the time, a series of tweets about a possible $72 billion acquisition of Tesla that never materialized landed Musk, the CEO of the electric car maker, in trouble with the U.S. Securities and Exchange Commission. The SEC said the billionaire knew a deal was not on the horizon.

Now, the civil lawsuit stemming from those tweets is being viewed as a window into Musk’s past and present behavior, which means the lawsuit could create new controversies of its own.

The trial begins Tuesday in San Francisco with jury selection. Here’s what else you need to know.

First, get a quick refresher on what’s happening with purchase tweets

On August 7, 2018 Musk wrote on his Twitter account that he provided the funding Tesla had to pay $420 per share for a potential buyout. He he tweeted again the same daystating that the move was imminent: “The only reason” the move is not certain is that it depends on a shareholder vote, he said.

But the buyout never happened.

After a week-long roller coaster ride in Tesla’s share price, the company said it lacked funding above all else. Musk said it was shareholder feedback that made him change his mind about the deal.

The SEC investigation led to a settlement with the company that included a $40 million fine, an equal split between Tesla and Musk, and Musk stepping down as chairman for at least three years.

The SEC said at the time that it wasn’t even close to closing in on the billions needed to pull off Musk’s acquisition of Twitter.

Musk has since said he believed he had the funding and entered the SEC settlement under pressure.

What is the business of this court?


Tesla shareholders say CEO Elon Musk, pictured here unveiling the Model Y in Hawthorne, Calif., in 2019, has put the company at undue financial risk by tweeting about a possible acquisition.

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Tesla shareholders say CEO Elon Musk, pictured here unveiling the Model Y in Hawthorne, Calif., in 2019, has put the company at undue financial risk by tweeting about a possible acquisition.

Frederic J. Brown/AFP via Getty Images

The lawsuit stems from a class-action lawsuit filed by investors who held Tesla stock during a 10-day period (August 7-17) that began the same day as Musk’s tweets.

District Judge Edward Chen has already ruled that Musk’s initial tweets were knowingly false and misleading. The jury will now decide whether Musk was negligent in deploying them, as well as whether Tesla shareholders were financially harmed.

During the 10-day period covered by the lawsuit, Tesla’s stock price rose about $14 billion, according to shareholders.

What happened to Tesla stock after the 2018 drama?

The August 2018 stock loss didn’t last long: Adjusted for two stock splits, Tesla’s stock is now worth nearly six times its 2018 value.

Still, recent investors also lost more than $14 billion at the heart of the case. After a meteoric rise, Tesla’s stock began to fall last year.

It lost 65% of its value in 2022 alone, partly due to a tough year for the overall auto industry and partly due to widespread disapproval of Musk’s takeover of Twitter.

According to the Guinness Book of Records, Musk himself broke the record for the most money lost by a person in the shortest time.

His fortune has fallen from an estimated $320 billion in 2021 to its current level of around $147 billion, although he is still one of the richest people in the world.

What is the threat to Musk?


A man walks past the Twitter offices in New York last week. Musk’s lawyers argued that public perception of the billionaire’s Twitter takeover had tainted potential jurors.

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A man walks past the Twitter offices in New York last week. Musk’s lawyers argued that public perception of the billionaire’s Twitter takeover had tainted potential jurors.

Angela Weiss/AFP via Getty Images

The CEO may lose another chunk of change depending on the outcome after this test. Shareholders say Musk should be compensated for the financial risk he has placed on them.

While Tesla’s stock price may not be directly on the line in this case, another factor at stake could be affected: Musk’s reputation.

As shareholders lose faith in Musk, we’ll learn a thing or two about his management style from a panel of witnesses that includes top Tesla executives and Silicon Valley stars like Oracle co-founder Larry Ellison. Associated Press.

The trial has already become a bit of a referendum on Musk’s favorability.

Last week, Judge Chen rejected the billionaire’s bid to move the trial to Texas, where Tesla is headquartered, starting in 2021.

Musk’s lawyers said the jury will not get a fair trial in San Francisco because of alleged bias against Musk in connection with the Twitter takeover, which included the firing of more than 3,750 employees.

The judge sided with the shareholders’ lawyers, who said Musk had only himself to blame for any negative feedback.





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