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Old 25-01-23, 04:52   #25
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Movies re: Musk Rebrands Twitter to X & Blue Bird Logo Killed Off

Elon Musk Defiantly Defends Himself in Tesla Tweet Trial Insisting He Could Have Pulled The Deal Off

Elon Musk shows in ‘funding secured’ trial that he does not live in the real world


BBC 25 JAN 2023





Elon Musk leaves the federal building and courthouse in San Francisco on Tuesday.

Tesla CEO claims to be the champion of Investors while being sued by them, says he thought taking Tesla private would be like buying a house, and insists he should still be trusted — will a jury still believe him?



San Francisco has been home in recent days to an upside-down world of contrasts where one of the world’s richest men, Elon Musk, enters a federal courtroom with four security staff in tow to portray himself as an advocate for the average retail investor who has never lost money for his investors.

The Tesla Inc. TSLA, +0.10% chief executive is in San Francisco to defend himself against a shareholder lawsuit stemming from his 2018 “funding secured” tweet, when he claimed to have a go-private deal for the electric-vehicle maker that was far from actually secured. In his three court appearances — a brief 30 minutes on Friday, several hours on Monday and a little over three hours on Tuesday — Musk has managed to spout a number of exaggerations, stretching the truth under oath on how he thinks the world of high finance works, all while stating that he was trying to save Tesla from the short-seller sharks of Wall Street.

The billionaire CEO played to the “Wall Street is swimming with sharks” mentality of small, individual investors, as he described his disdain for the short sellers in Tesla’s stock. When asked about his desire to take the EV company private, Musk mentioned short sellers as being one incentive to try and take Tesla private.

“I believe short selling should be made illegal,” he said Friday. “It is a means…for bad people to steal money from small investors.”

Musk appears to be trying to show that his intent in 2018 — a brutal year for Tesla — was to try and take it private as a way to reduce some of the pressure imposed by the short sellers “who wanted Tesla to fail,” and from Wall Street’s expectations. He often pointed out how he favors retail investors, as opposed to Wall Street, and did not want to leave them out of any communications that big investors may receive.

In this upside-down world, Musk believes that investors funding a go-private transaction don’t need to see more financials than what is publicly available or complete any further due diligence of the company they will be taking private. In testimony, Musk often repeated he believed funding was secured from the Saudi Arabian Public Investment Fund (PIF), which purchased 5% of Tesla stock in the public market to demonstrate its interest in the company, without any sort of written agreement.

Despite the wide gap between 5% and 100%, Musk believed that a verbal agreement was good enough for a full take-private transaction worth billions.

“Taking a company private is different than buying shares in the open market,” said attorney Nicholas Porritt, the plaintiffs’s counsel. “It’s not significantly different, ” Musk said. “It’s not?” Porritt asked. “I don’t think so,” Musk replied.

Even after a September 2018 settlement of fraud charges with the Securities and Exchange Commission as a result of those tweets, Musk still refuses to admit that funding was not secured and that he made a mistake. On Monday, Musk said that his infamous tweet about “funding secured” to take Tesla private at $420 a share was not a joke, that he also would have sold his SpaceX shares to fund the transaction, and that one of the key Saudi Arabian investors who he believed promised him funding from one of the world’s largest sovereign funds to take Tesla private was “backpedaling” and “ass-covering” when he asked Musk for more financial information on Tesla so their teams could meet and discuss a transaction.

But is it possible to believe that a man who says he has probably “raised more money than anyone in history” could have such a naive view of high finance? In Musk’s world, individuals can just make an offer on a house, and that bank will show up later once your offer is accepted.

“It is like buying a house,” Musk offered during while being questioned by plaintiff’s counsel. “PIF [the Saudi Public Investment Fund] is like the bank, saying they will support you. There is still documentation after you agree to buy a house, but you are still going through with it.” When Porritt pointed out that when he bought a house he had to get a written commitment from a bank before even making an offer, Musk said that was not how things worked with the sovereign investment fund.

Referring to the fund’s 5% stake in Tesla, Musk said that he had told them to buy shares on the open market to show that they were serious about working together in the future.

“There were no documents signed, no discussion of price, they went forward,” Musk testified. “Therefore it was reasonable to expect that they would behave as they had in the past.”

In Musk’s alternate universe, ARK Invest, which has about $16 billion of assets under management in several ETFs, like the ARK Innovation Fund ARKK, -1.58%, is a stand-in for small investors. Musk noted ARK Chief Investment Officer Cathie Wood as among the most influential people who did not want Tesla to go private because her fund could not participate, and said she “represents small investors” when Porritt asked him if he received feedback from small investors about the transaction.

In the case’s actual reality, a small investor is the lead plaintiff. Investor Glen Littleton detailed in testimony last week how he used options trades on both sides of Tesla to hedge his investment in a company in which he truly believed. Littleton described how he felt blindsided by the CEO of that company as he lost money while trying to reposition for a go-private transaction he was convinced by Musk would happen.

“It was pretty much going to wipe me out,” he testified.

This is exactly the type of investor that Musk purports to represent: “I care a great deal about retail investors, they are our most loyal and steadfast investors,” he said, even while being sued by a class of shareholders who lost their investment because of Musk’s actions. He tried to add during testimony, but was barred from a further statement, about his distaste for class-action lawsuits.

On Tuesday, when asked by the plaintiffs’s counsel about whether he thought his tweets caused investors to lose money or whether he felt any regret, Musk said: “I never wanted investors to lose money. If he did lose money on the basis of that tweet I would be sad about that, but investors in the public market….on balance they have done extremely well.”

More from Therese: It’s time for Elon Musk to start telling the truth about autonomous driving

Musk made some of his comments while looking directly at the nine jurors. Sometimes stammering, sometimes speaking slowly, on Monday Musk also apologized for not being at his best because he did not sleep well. Wearing a dark suit, Musk also complained of terrible back pain after a few hours on the stand.

But he was also combative at times with the plaintiffs’ counsel and managed to get in plenty of his own self-serving statements without being asked. Observers and jurors were all sitting socially distanced, with masks, making it difficult to read reactions on the jurors’ faces.

It is much more reasonable to expect one of the world’s most successful businessmen to require more proof than “well, it worked last time,” before telling thousands of his investors that a deal is nearly done. And those with a sense of how these deals typically work showed just how off Musk was.

Before Musk took the stand late Friday afternoon, Harvard University professor Guhan Subramanian testified as to how Musk’s tweets and his proposed buyout of Tesla was an “extreme outlier” compared with a number of leveraged buyouts he had studied in his database, including the $40 billion buyout of Dell Inc. DELL, -0.29%. Subramanian called Musk’s Twitter feed “egregious corporate governance” and said there are a series of well-planned-out steps typical in these kinds of transactions, and Musk’s was incomplete, incoherent and illusory.

But that is just par for the course with Musk, who managed to summarize this view of himself after his lawyer referred to him as potentially the greatest fundraiser of all time:

“The reason I am able to raise money is because investors trust me to be truthful and responsible with their money,” Musk said.

How many investors still believe that, after the “funding secured” tweet and everything else that has followed it, up to and including his Tesla stock sales to fund the Twitter acquisition and the subsequent decline in Tesla stock to its worst month, quarter and year on record? That may be impossible to know, but we will find out soon whether the jurors believed anything he said about the world according to Elon Musk.


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