In his testimony, Elon Musk stated that he had the backing of Saudi financiers to take Tesla private in 2018, and that he could have sold enough shares of his rocket company SpaceX to fund the buyout. This news marks a significant shift in Tesla’s ownership structure – with Musk no longer owning a majority stake in either company – and underscores SpaceX’s potential as a key player in the space race.
Many investors were left outraged after Elon Musk seemingly confirmed a $420 million buyout of Tesla, only to have the plan abruptly scrapped hours later. As part of a lawsuit filed against him for allegedly defrauding investors, many felt that this was another crass move from the CEO. Nevertheless, despite falling stock prices and intense scrutiny from regulators, Musk remains unwavering in his efforts to take Tesla private.
It is widely known that Elon Musk is a man of his word. If he loses the case against the Securities and Exchange Commission (SEC), it could damaged both his reputation and that of his company, Tesla. However, what’s really at stake for Musk is more than just money – if he loses this lawsuit, it could damage his standing as a truthful businessman who looks out for the best interests of his investors.
The testimony contradicting Musk’s original statements raises questions about his credibility as a spokesperson for Tesla and its shareholders. If the PIF did not intend to purchase Tesla outright, what other outcome could have been possible? This ambiguity dampens investor enthusiasm for Tesla stock and may lead to further price drops.
Since the deal to take Tesla private was announced, there has been skepticism surrounding its legitimacy. Many people feel that Musk may have used PIF money to secure funding for the deal without actually having it available. The fact that he refused to answer any questions about how the PIF money was used or where it came from only makes things more complicated.
In his deposition from last year, Musk denied explicitly selling SpaceX stock. Today, attorneys for the plaintiff allege that this point was only included because it was later discovered that Musk sold shares in June of 2018 – after winning the BFR contract. The inclusion of this information could cloud Musk’s credibility as a witness, and raises significant questions about his motives for testifying in court today.
Musk’s lawyer argued that his client’s ability to raise “more money than anyone in history,” along with the company’s unblemished track record of revenue and earnings, would have backed up his claims that funding had been secured.
The case against Tesla CEO Elon Musk has shocked the business world – but his trial isn’t the only thing on people’s minds. Many are also wondering if Musk’s incendiary tweets about the company’s takeover by buyers upped its value – an allegation his lawyers have denied. Given that last year’s ruling by U.S. Judge Chen that Musk’s posts were reckless could affect jurors’ opinion in this criminal case, it’ll be interesting to see how they decide whether he actually committed securities fraud and lied to investors over a period of several months leading up to and after the buyout announcement in early August 2018.
Musk says he tries to do what’s best for investors
Musk’s attorneys argued that he wasn’t trying to defraud investors, but actually wanted to bring some of them along. Tesla’s hardcore base of retail investors — like the plaintiffs in this case — is important to the company. But the SEC doesn’t allow retail investors to invest in private companies, which potentially limits Musk’s ability to raise capital and grow his company.
Since the public markets gave Tesla’s CEO and founder, Elon Musk, a $17 billion dollar net worth and the ability to invest in other companies such as The Boring Company and Falcon Heavy; many have been curious about his ability to turn Tesla into a private company. According to Investopedia, “Currently under SEC regulations, holders of more than 2.5% of publicly traded shares are required to disclose their ownership.” So even though many people own stock in Tesla through individuals or retirement funds, if Musk were able only purchase those shares at $420 apiece he would only hold 0.2% of the company. This would not be enough for him automatically become chairman or eligible for any multi-million dollar salary options but it would give him some control over what is being discussed at board meetings as well as voting rights should he choose to participate.
In addition to the boring roadster and convertible, Musk said that SpaceX investors would also be able to purchase a “utility vehicle” and a ” heavy hauler.” The utility vehicle is likely meant to be used for cargo or infrequent passengers, while the heavy hauler would presumably be used for shipments of large goods. However, Musk did not provide any more information about these vehicles or explain how they would differ from existing Tesla products.
Musk was referring to a type of investment vehicle that would allow retail investors to pool resources and purchase shares in a Tesla company-owned private model electric car. This would offer exposure to the growth of the Tesla brand while also benefiting from economies of scale and better access to technology innovations.
Investors are often concerned about liquidity when purchasing venture backed vehicles. While this concern may be valid for some types of ventures, it is not always the case with low-emission vehicles. These types of vehicles generally lack the liquidity that investors are looking for, and they can be difficult to sell or trade should someone want to move onto another venture.
Goldman Sachs and other investors appear to have had limits on how many retail investors they could involve in a private Tesla. The lawsuits claim this created an artificial demand for Tesla stock, which caused its price to rise.
Musk’s lawyers asserted on the stand that his tweets about taking Tesla private were nothing more than an attempt to get shareholder input. The Financial Times had reported weeks earlier that a Saudi Prince was interested in investing in the company, and Musk worried that they would leak the information before he could tell shareholders directly.
Musk may have been worried about how shareholders would perceive him, but he ultimately wanted them to know that he was trying to support them. By providing updates on the company and announcing a plan to increase share ownership of employees, Musk was ensuring that everyone involved in Tesla understood his intentions.
“The $420 price was not a joke.”
Musk was accused of securities fraud by the SEC after he made false tweets about Tesla’s stock. Musk eventually settled with the SEC for a combined $40 million, and required that a Tesla lawyer review all company-related tweets in advance.
Morgan Stanley analyst Adam Jonas told Reuters that he was “surprised” by the latest SEC allegations against Tesla CEO, Elon Musk. Jonas said that he believes that the SEC’s allegation of fraud could damage Musk’s reputation and impact the company’s stock price. In a letter sent to employees on August 7, 2019, Musk wrote “420” in an apparent reference to marijuana culture. His girlfriend reportedly found the comment amusing and considered it a harmless joke. However, if jurors find that Musk intentionally misled them about his intentions when making this comment – or any other misleading statements – this could have serious consequences for his career
Elon Musk’s Twitter post about marijuana prices generated a lot of backlash online, with some people accusing the Tesla and SpaceX CEO of supporting drug use. But according to him, the 420 reference was just a coincidence.
It seemed that Elon Musk’s promise to sell “420,000” Tesla Model S cars on April 20th was more than just a jokester. In fact, the reason for the high-price of the car is because it is actually 20% over stock price. This may not sound like a lot, but when you consider that there are only around 200,000 Teslas in existence and that each sells for around $70,000
In his testimony last Friday, Elon Musk said he didn’t believe his tweets about taking Tesla private affected the stock price. However, the jury seems to be unconvinced and is considering a verdict of guilty on five counts of securities fraud.
Many people view tweets as mere fleeting social media posts and do not often take them seriously. However, this does not mean that all tweets are equal. For example, Tesla’s CEO Elon Musk has a large following on Twitter, but he recently tweeted about how he was going to take down the SEC (the U.S. Securities and Exchange Commission) with his tweets. Many people took this tweet
