Elon Musk tells San Francisco court he tweeted about taking Tesla private in 2018 after meeting with Saudi investment fund, not as a ‘joke’
Elon Musk has defended his notorious August 2018 Twitter post about taking electric carmaker Tesla private, telling a US federal court the tweet was not a “joke”.
In his second day of testimony before the San Francisco court on Monday, Musk said he had disclosed his plan to take Tesla off the public stock markets after a 31 July, 2018 meeting with Saudi Arabia’s sovereign wealth fund.
The tweet said Musk was “considering” taking Tesla private at $420 (£340) per share and that he had “funding secured”. He added that “investor support is confirmed”.
He said the country’s Public Investment Fund had made it clear they backed a deal and had “many multiples” of what was required.
The fund was not expected to purchase all of Tesla, since Musk said he was able to sell his shares in SpaceX to make up for any shortfall.
“It’s important for the jury to know that,” Musk told the court.
Tesla’s shares ended the day up 11 percent following the tweet, but they declined again when no deal materialised.
Tesla and Musk each paid the Securities and Exchange Commission, the US financial regulator, $20 million to settle its claim that he had committed securities fraud.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
As part of the settlement Musk agreed to have future tweets regarding Tesla vetted by an independent committee.
Musk said he decided to tweet about the deal as a “split-second decision” after learning the Financial Times was planning an article about the PIF acquiring a $2bn stake in Tesla, describing the article on Monday as a “driving factor” behind the post.
Lawyers for the shareholders argued the post was unserious and that the $420 figure was a reference to cannabis.
According to SEC legal documents filed in 2018, Musk said he had picked a Tesla price on a particular day and added a 20 percent premium, which came to $419.
‘Not a joke’
The filing states: “He rounded the price up to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend ‘would find it funny, which admittedly is not a great reason to pick a price’.”
The number 420 refers to the date 20 April, which has a significance for marijuana culture in the US.
But Musk told the court that “420 was not chosen because of a joke; it was chosen because there was a 20 percent premium over the stock price”.
He added that there was “some karma around 420”, though “I should question whether that is good or bad karma at this point.”