Elon Musk’s enigmatic personality and unconventional tactics become key exhibits in a trial centered around one of his most polarizing pursuits – tweeting.
The process focused on two tweets announcing this musk had received the money to take away Tesla privately in 2018, reeled the 51-year-old billionaire into a San Francisco federal courtroom for three days to testify that opened a peephole into his often unfathomable mind.
Musk, who now owns the Twitter service he uses as a megaphone, was often a study in contrasts during his roughly eight hours at the booth. The electric-car maker’s CEO is facing a class-action lawsuit filed on behalf of Tesla shareholders after Musk tweeted about a takeover that didn’t happen.
Through both his testimony and the evidence presented, Musk came across as impetuous, brash, combative and contemptuous of anyone who questioned his motives as a pioneering entrepreneur who inspired comparisons to Apple’s late co-founder Steve Jobs.
At other times, Musk sounded like the accomplished visionary his supporters think he is — a fearless rebel who, by his own estimate, has raised more than $100 billion from investors. They have been richly rewarded by his leadership of pioneering companies including PayPal for digital payments, Tesla for electric vehicles and SpaceX for rocket ships.
“It’s relatively easy for me to get investment support because my track record is extremely good,” Musk noted wryly.
But his confidence in his ability to get the money he wants to pursue his schemes is one of the reasons he was on trial. The three-week trial is scheduled to resume on Tuesday and lead to jury deliberations by Friday.
Here’s what you know so far:
Plant the seeds
Evidence and testimonies have shown that Musk had started considering taking Tesla private in 2017 so he wouldn’t have to deal with the headaches and distractions that come with running a public company.
After meeting on July 31, 2018 with a top official from Saudi Arabia’s sovereign wealth fund, Musk sent a letter to Tesla’s board of directors explaining why he wanted to privatize the automaker at a price of $420 per share — about 20 percent above the share price at the time.
Musk was serious enough that he had already discussed the ins and outs with Michael Dell, who made the transition from public to private in 2013 when, according to trial evidence, he led a $25 billion acquisition of the personal computer company. that bears his name.
The annoying tweets
The crux of the case hinges on an Aug. 7, 2018 tweet in which Musk stated that he had “secured funding” to take Tesla privately. dollars to buy a 5% stake in Tesla to diversify its interests beyond oil.
Amid the widespread confusion over whether Musk’s Twitter account was hacked or if he was just joking, Musk tailed off a few hours later with another tweet indicating a deal was imminent.
Musk defended the initial tweet as a well-intentioned move to ensure all Tesla investors knew the automaker could be on track to end its then eight-year run as a public company.
“I had no bad motive,” Musk testified. “My intention was to do the right thing for all shareholders.”
Guhan Subramanian, a Harvard University economics and law professor who was hired as an expert shareholder advocate, derided Musk’s method of announcing a potential acquisition as an “extreme outlier” fraught with potential conflict.
“The risk is that Mr. Musk timed his announcement of his (management buyout) proposal to serve his own interests and not the interests of the company,” Subramanian testified.
Where is the money?
There’s another issue threatening to undermine Musk’s defense. He had not finalized funding for his proposed deal or even determined how much would be needed to go through with it, based on testimony from Musk, other witnesses and other evidence.
That’s one of the reasons U.S. District Judge Edward Chen ruled last year that Musk’s 2018 tweets were false and instructed the jury to see them that way.
It also prompted regulators to accuse Musk of misleading investors with the tweets, leading to a $40 million settlement with the U.S. Securities and Exchange Commission that also required Musk’s resignation as Tesla chairman .
Chen ruled that the 2018 settlement, in which Musk failed to acknowledge the wrongdoing and has since lamented it, could not be mentioned before the jury.
Musk testified that during a face-to-face meeting with Yasir al-Rumayyan, Governor of the Saudi Arabian Wealth Fund, on July 31, 2018, he believed he received a verbal commitment to wherever money is needed for a Tesla buyout.
This was reinforced by testimony from Tesla’s former chief financial officer, Deepak Ahuja, who attended the discussions and took al-Rumayyan on a half-hour tour of a Tesla factory.
But a text message al-Rumayyan sent to Musk after the “funding secured” tweets made it appear that discussions about the Saudi fund financing a private buyout were tentative.
“I would like to hear your plan, Elon, and what are the financial calculations to undertake it,” al-Rumayyan wrote to Musk, according to a copy filed in evidence at the trial.
Musk framed al-Rumayyan’s text as an attempt to back down from his previous engagement. He also insisted that the Saudi fund had made a “clear commitment” to fund the takeover.
maneuver money
Following his 2018 tweets, Musk tried to raise the money needed to buy Tesla with the help of Egon Durban, co-CEO of private equity firm Silver Lake, which helped fund the Dell buyout in 2013. Musk also hired Dan Dees, a top executive at Goldman Sachs, an investment bank that had worked closely with Tesla.
In testimony, both Durban and Dees discussed efforts to raise money for a Tesla buyout for a wide range of potential investors, including two Chinese companies, Alibaba and Tencent, as well as Google in documents originally codenamed “Project Turbo,” then ” Project Titan.”
The acquisition would have required between $20 billion and $70 billion, according to the documents — funding that never came close, Durban and Dees both said, largely because Musk scrapped a proposal to privatize Tesla on Aug. 24, 2018 would have. after consultation with the shareholders.
Tesla’s shares are now worth eight times what they were after two stock splits were settled.
Musk still claims he could have gotten the money if he wanted, and even had there been a shortage, he could have filled any gap by selling some of his stake in privately held SpaceX. That’s a strategy Musk used in his $44 billion purchase of Twitter, except he sold about $23 billion of his Tesla stock.
Durban and Dees both said they had no doubt the money for a buyout could have been raised – repeated by former Tesla CEO Antonio Gracias.
“He’s the Michael Jordan of fundraising,” Gracias testified.
