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Elon Musk’s Tesla Tweet Trial Probes Investor Damages

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Elon Musk’s Tesla Tweet Trial Probes Investor Damages

(CTN NEWS) – SAN FRANCISCO – Estimates made Tuesday at a trial looking into the careless handling of the buyout proposal claimed that an Elon Musk tweet announcing he had the cash to take Tesla private in 2018.

Which caused billions of dollars in investor damages when the transaction fell through.

The complex projections made by two specialists recruited by lawyers for Tesla stockholders highlighted the difficulties a nine-person jury would face as the three-week trial ends this week.

Judge Edward Chen of the U.S. District Court anticipates submitting the case to the jury on Friday.

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Elon Musk leave the Phillip Burton Federal Building and United States Court House in San Francisco, Tuesday, Jan. 24, 2023.(AP Photo/ Benjamin Fanjoy)

Depending on the outcome, Musk and the electric car company he owns may be subject to more financial repercussions due to his erratic behavior on the Twitter site.

Following Elon Musk’s troubling tweets in August 2018, Tesla and the company agreed to a $40 million settlement with securities regulators without admitting any wrongdoing.

The jury in this class-action case brought on behalf of Tesla shareholders must first decide whether Musk abruptly published two tweets on August 7, 2018, misled Tesla investors.

Trying to determine how much Musk, one of the richest people in the world, and Tesla should have to pay for the fraudulent tweets could be an even more difficult challenge for the jury.


Alex Spiro, attorney for Elon Musk, arrives at a federal courthouse in San Francisco Friday, Jan. 20, 2023. (AP Photo/Jeff Chiu)

Should they decide to hold Elon Musk accountable for the false tweets Chen has already found?

The economist Michael Hartzmark, one of the two experts who testified on Tuesday.

Went over a report that used words like “but-for” and “consequential inflation” to support a claim that Tesla shareholders suffered losses over a 10-day period in August 2018 that ranged from $4 billion to $11 billion.

Or $22.55 to $66.67 per Tesla share at the time.

Steven Heston, a professor of finance at the University of Maryland, reviewed an even more detailed report that examined how Musk’s tweets affected more than 2,000 different Tesla stock options types.

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© Reuters. Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, U.S. January 27, 2023. REUTERS/Jonathan Ernst

This report largely relied on the Black-Scholes model, a widely used formula by businesses to value executive compensation packages.

When questioned by a Musk attorney on the validity of his model, Heston admitted that “all models stray from reality, which is why they are models.”

Heston declined to provide a specific estimate of the investor damages, stating it was the jury’s responsibility. Heston claimed he was paid $300,000 to $350,000 for his participation in the case.

The key moment in the lawsuit is a tweet by Elon Musk on August 7, 2018, in which he announced that money was “secured” to take Tesla private.

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According to Elon Musk’s testimony, he hurriedly sent the tweet minutes before boarding his private jet after learning that the Financial Times was about to publish an article.

About how the Public Investment Fund of Saudi Arabia had spent about $2 billion purchasing a 5% stake in Tesla to diversify its holdings beyond oil.

Musk responded a few hours later with another post that implied a transaction was close to happening amid significant doubt over whether his Twitter account had been hacked or he was joking.

Throughout almost eight hours of sworn evidence, Musk argued on many occasions that he was acting in the best interests of his shareholders and that the Saudi fund had made a finance pledge.

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Documents related to the class-action lawsuit on behalf of investors who owned Tesla stock in August 2018 are carried toward a federal courthouse in San Francisco, Friday, Jan. 20, 2023. (AP Photo/Jeff Chiu)

That had now been revoked due to his “funding secured” tweet.

Elon Musk further claimed that he might have still completed the acquisition with the help of other investors and the sale of some of his shares in SpaceX, the rocket ship manufacturer he created.

Musk determined Tesla should stay publicly listed after discussing with the company’s significant owners; this choice has benefited him and other investors.

After accounting for two stock splits since Musk’s buyout tweet, Tesla’s shares are now worth more than eight times what they did at that time.


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Alishba Waris is an independent journalist working for CTN News. She brings a wealth of experience and a keen eye for detail to her reporting. With a knack for uncovering the truth, Waris isn't afraid to ask tough questions and hold those in power accountable. Her writing is clear, concise, and cuts through the noise, delivering the facts readers need to stay informed. Waris's dedication to ethical journalism shines through in her hard-hitting yet fair coverage of important issues.

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