Elon Musk appears in court to defend Tesla buyout tweets after lawsuit alleging he misled investors

Elon Musk Credit: AP

Elon Musk has appeared on the witness stand to defend a 2018 tweet claiming he had lined up the financing to take Tesla private in a deal that never came close to happening.

Musk, 51, defended his prolific tweeting in his initial appearance on the stand as “the most democratic way” to distribute information.

His 2018 tweet resulted in a $40 million (around £32 million) settlement with securities regulators.

It also led to a class-action lawsuit alleging he misled investors, pulling him into court for around 30 minutes on Friday to deliver sworn testimony in front of a nine-person jury and a full room of media and other spectators.

A courtroom sketch of Elon Musk (left) with shareholder attorney Nicholas Porritt, appearing in federal court in San Francisco. Credit: AP

In court, the tech billionaire acknowledged the constraints of Twitter's 280-character limit can make it difficult to make everything as clear as possible.

“I think you can absolutely be truthful (on Twitter),” Musk said on the stand.

“But can you be comprehensive? Of course not,” he added.

Musk's latest headache stems from his historic tweets on the social media platform, which he has since been running after completing his $44 billion purchase of it in October.

The trial hinges on the question of whether a pair of tweets that Musk posted on August 7, 2018 damaged Tesla shareholders during a 10-day period leading up to a Musk admission that the buyout he had envisioned wasn’t going to happen.

In the first of those those two 2018 tweets, Musk stated “funding secured” for a what would have been a $72 billion (£58 billion) buyout of Tesla at a time when the electric car company was still grappling with production problems and was worth far less than it is now.

Musk followed up a few hours later with another tweet suggesting a deal was imminent.

Alex Spiro, attorney for Elon Musk, arrives at a federal courthouse in San Francisco. Credit: AP

After it became apparent that the money wasn't in place to take Tesla private, Musk stepped down as Tesla’s chairman while remaining CEO as part of the Securities and Exchange Commission settlement - without acknowledging any wrongdoing.

On Friday, Musk arrived at court wearing a dark suit and tie to appear on the third day of the civil trial in San Francisco.

His lawyer had unsuccessfully tried to move the hearing to Texas - where Tesla is now headquartered - on the premise that media coverage of Musk's tumultuous takeover of Twitter had tainted the jury pool.

In court, Musk said he cares “a great deal” about investors and also railed against short sellers who make investments that reward them when a company's stock price falls.

He called short selling an “evil” practice that should be outlawed, calling those who profit from it “a bunch of sharks."

When shown communications from Tesla investors urging him to curtail or completely stop his Twitter habit before the 2018 buyout tweet, Musk said he couldn't remember all those interactions from years ago, especially since he gets a “Niagara Falls" of emails.

When asked about the challenges that Tesla faced in 2018, he recalled spending many nights sleeping at the automaker's California factory as he tried to keep the company afloat. “The sheer level of pain to make Tesla successful during that 2017, 2018 period was excruciating," he recalled.

The trial was adjourned for the weekend and Musk has been told to return Monday to answer more questions.

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