Summary

• Elon Musk on trial for 2018 tweet about Tesla privatization
• Investors claim tweet cost them millions
• Musk forced to step down as chairman, fined $20M by SEC

Elon Musk, the CEO of electric car company Tesla, is currently on trial for a controversial tweet he made in 2018 about taking the company private. Investors have claimed that the tweet cost them millions of dollars when a deal did not go through.

Musk claims that at the time he made the tweet, he had met with a Saudi Arabia sovereign wealth fund who had indicated they would support a deal, and that he would have sold his stake in rocket firm SpaceX to raise money. He is accused of defrauding investors after he tweeted on August 7th 2018 that he had "funding secured" to take Tesla private at $420 per share, and that "investor support is confirmed". This tweet caused shares in Tesla to soar, but when the plan was no longer going ahead, shares fell back causing a significant backlash for the billionaire.

As a result of the tweet, Musk was forced by the Securities and Exchange Commission (SEC), the US regulator, to step down as Tesla's chairman and had to have any tweets related to Tesla vetted by an independent committee. He and Tesla were also fined $20 million each to settle a claim by the SEC that he had committed securities fraud.

On Monday, Musk told a court in San Francisco that he had met with representatives from Saudi Arabia's Public Investment Fund on July 31st, 2018. He said that while a price for taking Tesla private was not discussed, he claimed that the representatives from the fund made it clear they backed a deal. However, Musk also claimed that Yasir Al-Rumayyan, the fund's governor, then appeared to backpedal on the pledge. "I was very upset because he had been unequivocal in his support for taking Tesla private when we met and now he appeared to be backpedaling," he said.

During the trial, Musk was also questioned about how he decided on a price of $420 a share and whether it was a reference to marijuana. According to a filing by the SEC in 2018, Musk had calculated the price by taking Tesla's share price on a particular day and adding a 20% premium. Based on that calculation, the price came to $419. But, according to the SEC's legal documents, "He rounded the price up to $420 because he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it funny, which admittedly is not a great reason to pick a price'." In American counterculture, April 20th is a day when thousands of people gather to celebrate marijuana. In the US, dates are written with the number of the month first, then the day - in this case 4/20.

Musk, who has smoked cannabis in public but claimed not to be a regular user, told the court: "420 was not chosen because of a joke; it was chosen because there was a 20% premium over the stock price." He added that there was "some karma around 420", though "I should question whether that is good or bad karma at this point."

Musk, who bought the social media platform Twitter for $44 billion last year, had told the court on Friday that he did not think that his tweets had affected Tesla's share price. "Just because I tweet something does not mean people believe it or will act accordingly," he told jurors. Musk also took aim at "evil" short-sellers, who are investors that bet that a company's share price will fall. He told the nine jurors: "It's difficult to appreciate just now just how much attack Tesla was under by short sellers who wanted Tesla to die."