Elon Musk’s Mysterious Ways on Display in Tesla Tweet Trial

Elon Musk's Mysterious Ways on Display in Tesla Tweet Trial

Elon Musk’s enigmatic personality and unconventional tactics are emerging as key exhibits in a trial revolving around one of his most polarizing pursuits — tweeting

Elon Musk’s enigmatic nature and unconventional strategies are coming to light as key exhibits in a trial centered around one of his most divisive hobbies: tweeting.

The 51-year-old billionaire was drawn into the trial, which was centered on two tweets Musk sent in 2017 announcing he had secured the funding to take Tesla private, into a federal courtroom in San Francisco for three days of testimony that provided a glimpse into his frequently enigmatic mind.

Musk, who now owns the Twitter service he uses as his megaphone, was frequently a study in contrasts during his approximately eight hours on the stand. After Musk tweeted about a company buyout that never materialized, Tesla shareholders filed a class-action lawsuit against the company’s CEO.

Musk, a game-changing entrepreneur who has drawn comparisons to Apple’s late co-founder Steve Jobs, came across through both his testimony and the evidence presented around it as impetuous, brash, combative, and contemptuous of anyone who questioned his motives.

Other times, Musk sounded like the astute visionary, a daring rebel who, according to his own estimates, has raised more than $100 billion from investors. His management of trailblazing businesses like PayPal in digital payments, Tesla in electric cars, and SpaceX in rocket ships has richly rewarded them.

“It is relatively easy for me to get investment support because my track record is extremely good,” Musk wryly observed.

However, one of the reasons he ended up in court was because of his certainty that he could obtain the funds he needs to carry out his plans. The three-week trial will resume on Tuesday, and by Friday, the jury will begin deliberating.

Here’s what to know so far:

PLANTING THE SEEDS

Musk began considering taking Tesla private in 2017 so he wouldn’t have to deal with the hassles and distractions that come with managing a publicly traded company, according to evidence and testimony.

Musk wrote a letter to Tesla’s board outlining his reasons for wanting to take the automaker private at a price of $420 per share, which was about 20% above its stock price at the time, after meeting with a senior official from Saudi Arabia’s sovereign wealth fund on July 31, 2018.

According to trial evidence, Michael Dell, who had undergone the public-to-private transition in 2013 when he oversaw a $25 billion buyout of the personal computer company bearing his name, was sufficiently serious that Musk had already discussed the advantages and disadvantages with him.

THE TROUBLESOME TWEETS

The key to the case depends on an Aug. 7, 2018, tweet in which Musk declared “funding secured” to take Musk, who testified that he posted the tweet minutes before boarding his private jet, was informed that the Financial Times was about to run a story about Saudi Arabia’s Public Investment Fund spending about $2 billion to acquire a 5% stake in Tesla in order to diversify its interests beyond oil.

Musk responded a few hours later with another tweet implying a deal was close at hand amid widespread confusion over whether his Twitter account had been hacked or he was joking.

Musk defended the initial tweet as a sincere effort to let all Tesla investors know the automaker might be about to end its then-eight-year run as a publicly traded company.

“I had no ill motive,” Musk testified. “My goal was to act in the best interests of all shareholders.”

Guhan Subramanian, a Harvard University business and law professor hired as an expert for shareholder lawyers, derided Musk’s method for announcing a potential buyout as an “extreme outlier” fraught with potential conflicts.

“The risk is that Mr. Musk timed his announcement of his (management buyout) proposal to serve his own interests rather then the interests of the company,” Subramanian gave a statement.

WHERE’S THE MONEY?

A different problem poses a threat to Musk’s defense. Based on testimony from Musk, other witnesses, and other evidence, he hadn’t secured the financing for his proposed deal or even determined how much would be required to pull it off.

One reason the U.S. Musk’s 2018 tweets were found to be false, and District Judge Edward Chen instructed the jury to view them as such.

Additionally, it led to accusations from regulators that Musk had deceived investors with his tweets, which led to a $40 million settlement with the United States. Musk was also required to resign from his position as chairman of Tesla by the Securities and Exchange Commission.

According to Chen’s decision, the 2018 settlement—which Musk did not acknowledge wrongdoing in but has since bemoaned—cannot be brought up in front of the jury.

During a face-to-face meeting on July 31, 2018, with Yasir al-Rumayyan, the governor of Saudi Arabia’s wealth fund, Musk testified that he thought he had obtained an oral promise to pay for a Tesla buyout wherever needed.

Deepak Ahuja, who served as Tesla’s former CFO and gave al-Rumayyan a tour of a Tesla factory for 30 minutes, confirmed this in his testimony. Ahuja was present during the discussions.

But a text message al-Rumayyan sent to Musk after the “funding secured” tweets made it appear that the discussions about the An initial private buyout was funded by a Saudi fund.

“I would like to listen to your plan Elon and what are the financial calculations to take it,” al-A copy that was provided as evidence in the trial claims that Rumayyan wrote to Musk.

Al-Rumayyan’s text was interpreted by Musk as an effort to back out of a previous promise. He also insisted the Saudi fund had given an “unequivocal commitment” to financing the buyout.

MONEY MANEUVERING

In response to his 2018 tweets, Musk attempted to raise the necessary funds for the Tesla acquisition with the aid of Egon Durban, co-CEO of the private equity firm Silver Lake, which was involved in the 2013 financing of the acquisition of Dell. Dan Dees, a senior executive at the investment banking company Goldman Sachs, who had previously collaborated closely with Tesla, was also enlisted by Musk.

In testimony, both Durban and Dees discussed efforts to raise money for a Tesla buyout for a wide range of potential investors that included two Chinese companies, Alibaba and Tencent, as well as Google in documents initially code-named “Project Turbo,” then “Project Titanium.”

According to the documents, the buyout would have needed between $20 billion and $70 billion in funding; however, as both Durban and Dees testified, no money even came close to being raised because Musk abandoned his plan to take Tesla private on August 1. 24, 2018, after consulting with shareholders.

After two stock splits were taken into account, the current value of Tesla’s shares was eight times what it was back then.

Musk continues to maintain that he could have obtained the funds if he had desired to do so, and even if there had been a shortfall, he could have made up the difference by selling some of his stock in privately held SpaceX. With the exception of selling about $23 billion of his Tesla stock, Musk employed that strategy in his $44 billion acquisition of Twitter.

Former Tesla director Antonio Gracias echoed what Durban and Dees said during their testimony: “I have no doubt that the money for a buyout could have been raised.”

“He is the Michael Jordan of fundraising,” Gracias testified.

Reference: https://abcnews.go.com/Business/wireStory/elon-musks-mysterious-ways-display-tesla-tweet-trial-96751941

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