Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Shareholders could either to sell at 420 or hold shares & go private
— Elon Musk (@elonmusk) August 7, 2018
What happened in 2018?
It was proven that Musk had not secured the funding needed to ensure a deal. The day Musk tweeted that funds were secure, Tesla shares immediately climbed 11%; however, the shares never reached $420 a share. After a few more tweets and shareholders realizing the funding was not secured, the shares fell below their pre-tweet price, causing shareholders to lose money within a ten-day span. The U.S. Securities and Exchange Commission then sued Musk accusing him of knowingly making false and misleading statements. Musk eventually agreed to step down as chairman while remaining as the CEO. He also agreed to pay a $20 million penalty. However, the Tesla CEO never had to admit or deny the SEC’s allegations.
Present Day Trial
Elon Musk and Tesla are back in court four years later for the same infamous tweet because investors are now suing, and they also claim Musk did not line up money to take Tesla private in 2018 even though he stated funding was secured. Investors believe Musk made false statements to manipulate Tesla’s stock price and ruin plans for short sellers. A District Judge has ruled that the tweets were knowingly false and misleading. Now the judge will determine whether Musk acted recklessly by posting the tweets and if he caused harm to financial shareholders. The stocks are reportedly worth six times more than they were in 2018, but during the 10-day time frame of the tweets, stock prices swung by an estimated $14 billion.
If Musk loses this case, it could cost him to lose an even more significant chunk of his wealth. Musk recently lost the title of the wealthiest person in the world after his stake in the company dropped significantly, and he put $44 billion in Twitter.
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