Tesla CEO Elon Musk reportedly told a federal court in San Francisco today that he could have sold SpaceX shares to support a Tesla privatization plan proposed in 2018.
The Tesla privatization tweet case entered its second day of the trial on Monday, local time. The class action case began in August 2018 when Musk announced on Twitter that he was considering taking Tesla private at $420 per share. Musk also said at the time that funding for the privatization had been secured, that it was backed by Saudi Arabia’s sovereign wealth fund PIF and that the company’s investors supported the decision.
The news pushed Tesla’s share price up by around 13% on the same day, closing at $379.57 per share. But then, as things reversed course, Tesla’s share price fell. In response, Tesla investors launched a class action lawsuit, alleging that Musk issued false or misleading statements.
At today’s hearing, Musk claimed that he said he had “already secured funding for this potential deal” for another reason: he could also sell his stake in SpaceX, the space exploration technology company owned by Musk, who is CEO and its largest shareholder, to finance the deal. Musk is also its largest shareholder.
The SpaceX stock itself means that the potential deal is financially secure,” Musk said in court. Of course, that doesn’t mean I want to sell SpaceX stock, but I can do that. Look at the Twitter deal, that’s what I did. I sold my Tesla shares to complete the acquisition of Twitter. It was the same at the time.”
Musk, however, did not reveal how much of SpaceX he would sell, to whom, and at what price, to finance the privatization of Tesla.
At the trial, Nicholas L. Porritt, the lawyer representing the plaintiffs’ shareholders, asked Musk if he was joking when he offered $420 per share for Tesla’s privatization since “420” is a pop culture reference to marijuana (April 20 is “International Marijuana Day). Musk, on the other hand, insists that this is a complete coincidence.
Musk announced in late August 2018 that he was abandoning his plans to privatize Tesla due to multiple resistance. Musk claimed at the time that the privatization had taken more time and effort than initially anticipated and that the majority of Tesla’s shareholders also believed that Tesla should remain a public company.
