On the second day of a lawsuit brought by Tesla shareholders over a 2018 tweet in which CEO Elon Musk tweeted that he was thinking about making Tesla a private company for $420 a share, Musk swore in court that he was real about it and the tweet was no joke.
According to the Twitter and SpaceX boss, he thought had secured funding through a Saudi sovereign wealth fund and everything was in place.
“My understanding was that they would proceed with the deal,” Musk said. He further testified that the head of the $620 billion Saudi fund had “been unequivocal in his support for taking Tesla private when we met” but later “appeared to be backpedaling.”
Elon Musk’s tweet then was met with confusion because as at that time, 420 is popular stoner slang for that time of day when everyone should relax with a joint (weed), some bong-hits, or edibles.
However, the tweet cost him $20 million in fines and he was forced to step down as Tesla’s executive chairman.
Musk claimed the Saudi fund had agreed to buy five percent of Tesla, and that he could not be faulted for believing that the deal has been concluded. He then tweeted the information to ensure “all investors would be on equal footing,” because he didn’t want the press leaking the news first.
Glen Littleton, the lead plaintiff sees Musk’s assertions as dubious, testifying that he had lost 75 percent of his investment following the tweet.
An expert witness for the plaintiff, Harvard Law professor Guhan Subramaniam, argued that Musk’s actions were a great departure from good corporate governance.
Subramanian explained that when a company goes private, the process of privatization is thorough and controlled, adding that a special committee is usually formed, and advisers and boards of directors are consulted for months before the announcement, which was different from what Elon Musk did with Tesla.
