A California jury has ruled that Elon Musk is not liable for losses experienced by Tesla shareholders following his controversial “funding secured” tweet from 2018. The unanimous verdict, announced on Friday, February 4th, in US District Court, ends a three-week-long trial over a class-action shareholder lawsuit regarding the tweet, in which the billionaire said that he was thinking about taking Tesla private for $420 a share and had “funding secured.” Those two words resulted in the CEO having to forfeit his position as Tesla’s executive chairman and pay millions of dollars in fines and legal fees.
The plaintiffs, several Tesla shareholders, alleged that they lost significant portions of their investments in the wake of the share price volatility following the tweet. They were seeking monetary damages from Musk, Tesla, and other Tesla directors in their lawsuit. However, the jury ruled that the plaintiffs failed to prove any of their four claims against Musk and the other defendants.
“Thank goodness, the wisdom of the people has prevailed!” Musk tweeted after the verdict was announced. “I am deeply appreciative of the jury’s unanimous finding.”
Nicholas Porritt, a lawyer representing the Tesla shareholders, told CNN: “We are disappointed with the verdict and examining next steps.”
The tweet in question was posted on August 7th, 2018, and caused a significant amount of speculation and confusion in the financial world. Tesla shares initially climbed 11% on the day of the tweet, but they never reached the promised $420 level, reaching a high of $387.46 that day. They soon fell well below their pre-tweet price of $344, hitting $263.24 a month later, as it became clear that the funding was less than secure. This prompted the shareholder suit that reached trial after more than four years.
A turn from losses to profits about a year after the tweet started Tesla shares on an extraordinary run, gaining 1520% from the day of the tweet to its record high in November 2021. That record close of $409.97 works out to $6,150 a share, when adjusted for the two stock splits since that day. Even with the 70% decline in Tesla shares from that all-time high to Friday’s close, shares are still up 384% since the close on the day of the 2018 tweet.
Elon Musk testified in a California courtroom for a third day in the Tesla shareholder lawsuit on January 24th. During the trial, the defense argued that Musk’s tweet was a joke and that the plaintiffs failed to prove that the tweet caused them any actual harm. The defense also argued that Tesla’s financial disclosures and press releases about the company’s financial situation were clear and accurate.
The verdict in this case is seen as a victory for Elon Musk, who has faced numerous lawsuits and controversies throughout his career. This case is just one of several that has called into question the accuracy of Musk’s statements and tweets, and it will likely impact the way he communicates with the public and investors in the future.
While the lawsuit has come to a close, the impact of the “funding secured” tweet will continue to be felt for some time. The Tesla shareholders who brought the lawsuit will now have to determine their next steps, and the company will continue to face increased scrutiny and criticism as it grows and expands. Regardless of the outcome of this case, Elon Musk remains a controversial and influential figure in the business world, and his actions and statements will continue to be closely watched and analyzed.
In conclusion, the jury’s verdict in this case demonstrates the importance of accuracy and transparency in financial communications. While Elon Musk may have escaped liability in this case, it is crucial for executives
