Elon Musk speaks near a Falcon 9 rocket during his announcement that Japanese billionaire Yusaku Maezawa will be the first private passenger to fly around the Moon aboard the SpaceX BFR launch vehicle.
DAVID MCNEW | AFP | Getty Images
Elon Musk told federal court in San Francisco on Monday that he could have sold shares of SpaceX to take You’re here private in 2018. He was then, and still is, the CEO and largest shareholder of both companies.
Musk is being sued by Tesla shareholders over a series of tweets he wrote in August 2018 saying he had “secured funding” to take the automaker private for $420 a share, and that “investor backing” for such agreement was “confirmed”. Trading in Tesla was halted after his tweets and its stock price remained volatile for weeks.
Shareholders in the certified class action allege that Musk’s tweets were reckless and untrue, and that relying on his statements to make investment decisions cost them significant sums.
Musk would later claim he had a verbal commitment from Saudi Arabia’s sovereign wealth fund and was sure the funding would come in at the price offered on the basis of a handshake. However, the deal never materialized.
During his second day on the witness stand, Musk claimed another reason he said he “got funding” for a deal in 2018 was so he could have sold shares of SpaceX, a sub -American defense contractor and a satellite Internet company which he also manages. , in order to finance the operation.
Musk said under oath: “SpaceX stock alone meant ‘secure funding’ per se. It’s not that I wanted to sell SpaceX stock but I could have, and if you look at the Twitter transaction – it I did. I sold Tesla shares to complete the Twitter transaction. And I would have done the same here.”
Musk did not specify how many shares of his reusable rocket maker he could have sold, to whom and at what price to fund the takeover of Tesla.
In April 2018, SpaceX said in a filing with the Securities and Exchange Commission that it had raised about $214 million in a funding round in which it was seeking more than $500 million in equity.
A shareholder attorney, Nicholas L. Porritt of Levi & Korsinsky, asked Musk if the price he was suggesting for Tesla shares was a joke, as 420 is a pop culture reference to cannabis.
Musk insisted it was a coincidence. He said, “There is, I think, karma around 420…I should wonder if it’s good or bad karma at this point.”
This isn’t the first legal action Musk has faced over his tweets. The SEC charged Musk and Tesla with civil securities fraud shortly after they filed, and they paid separate fines of $20 million to the federal agency to settle the charges. They then signed a revised consent decree that required Musk to temporarily relinquish his role as chairman of Tesla’s board of directors and ask a securities attorney for bold tweets containing material business information about Tesla before he don’t publish them.
Musk recently became the CEO of social media firm Twitter after leading a $44 billion leveraged buyout of the company in October 2022. Saudi Prince Alwaleed bin Talal bin Abdulaziz is the company’s second largest shareholder of social media after Musk. Last November, Senator. Chris Murphy, D.-Conn, has sent a letter to the Committee on Foreign Investment in the United States requesting a review of funding for the Musk-Twitter deal.