SAN FRANCISCO, Jan 20 (Reuters) – Elon Musk, Tesla Inc’s ( TSLA.O ) chief executive, testified on Friday that investors don’t always respond to his Twitter messages as he expects, defending himself in a fraud lawsuit over his tweet from 2018 that he had the funds to take the electric car maker private.
Musk’s testimony began with questions about his use of Twitter, the social media platform he bought in October. He called it the most democratic way to communicate, but said his tweets didn’t always affect Tesla stock the way he expected.
“Just because I tweet something doesn’t mean people will believe it or act on it,” Musk told the jury in San Francisco federal court.
Musk testified for less than 30 minutes before court adjourned until Monday, and he was not asked about his 2018 tweet that he was considering taking Tesla private and that he had “secured financing.”
He is expected to address why he has insisted he had Saudi investor backing to take Tesla private, which never happened, and whether he deliberately made a materially misleading statement with his tweet.
The case is a rare securities class action, and the plaintiffs have already cleared high legal hurdles, with US Judge Edward Chen ruling last year that Musk’s funding record was untrue and reckless.
Shareholders alleged that Musk lied when he sent the tweet, costing investors millions.
Musk, wearing a dark suit over a white button-down shirt, spoke softly and in a sometimes confused manner, a contrast to his occasionally combative testimony in previous trials.
Musk described the difficulties the company was going through around the time he sent the “funded secured” tweet, including bets from short sellers that the stock would fall.
“A bunch of Wall Street sharks wanted Tesla to die, really bad,” he said, describing short sellers, who profit when a stock falls in price.
He said short sellers plant fake stories and said the practice should be made illegal.
Shares in Tesla ended around 5% higher at $133.42.
Earlier on Friday, Tesla investor Timothy Fries told the jury that he lost $5,000 buying Tesla shares after Musk sent the tweet, which triggered volatile swings in Tesla’s shares.
Fries said that “funding secured” meant to him that “there had been some scrutiny, some critical reviews of these funding sources.”
Musk’s lawyer, Alex Spiro, told the jury in his opening statement Wednesday that Musk believed he had funding from Saudi backers and took steps to get the deal done. Fearing leaks to the media, Musk tried to protect the “everyday shareholder” by sending the tweet, which contained “technical inaccuracies,” Spiro said.
Guhan Subramanian, a professor at Harvard Law School, told the jury that Musk’s behavior in 2018 was “unprecedented” and “incoherent” in structuring a corporate deal because he announced his intent without proper financial or legal analysis.
A jury of six men and three women will decide whether the tweet artificially inflated Tesla’s stock price by playing up the financing status of the deal, and if so by how much.
The defendants include current and former Tesla executives, who Spiro said had “pure” motives in their response to Musk’s plan.
Reporting by Tom Hals in Wilmington, Del., and Jody Godoy in San Francisco; Editing by Noeleen Walder, Peter Henderson, Matthew Lewis, Daniel Wallis and David Gregorio
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