Scott Olson
A San Francisco jury dominated Friday in Tesla founder Elon Musk’s favor in a class-action shareholder lawsuit over his 2018 “funding secured” tweet, during which the entrepreneur questionably claimed to have financing lined as much as take Tesla (NASDAQ:TSLA) personal.
“Thank goodness, the knowledge of the individuals has prevailed!” Musk tweeted Friday after jurors in a federal civil trial discovered on his behalf. “I’m deeply appreciative of the jury’s unanimous discovering of innocence within the Tesla 420 take-private case.”
Class-action attorneys representing shareholders of Tesla (TSLA) sued over an Aug. 7, 2018, tweet during which Musk wrote: “Am contemplating taking Tesla personal at $420. Funding secured.”
The tweet despatched TSLA hovering 11% to as excessive as $387.46 that day, though the inventory failed to achieve $420 because the take-private thought foundered. It additionally turned out that whereas Musk had talked to Saudi traders about offering financing for a take-private deal, such funding arguably wasn’t actually “secured.”
TSLA inventory finally sank as a lot as some 35% intraday a month after Musk’s tweet, and the take-private deal by no means went ahead.
Attorneys representing shareholders claimed that Musk unfairly despatched TSLA’s inventory worth greater by overstating how stable the deal’s financing was. Had they prevailed, a courtroom might have ordered Musk to pay billions of {dollars} in damages.
The U.S. Securities and Change Fee additionally beforehand sued Musk over the incident, reaching an out-of-court settlement during which he and Tesla (TSLA) every paid $20M and Musk gave up his chairmanship of the EV maker. Friday’s jury verdict got here in an unrelated case introduced on behalf of particular person stockholders.
Musk final month testified in his personal protection on the San Francisco trial, saying that the Saudi traders he spoke with “unequivocally” wished to assist take the corporate personal.
And whereas Telsa (TSLA) initially fell when the take-private deal got here aside, the inventory later started a multi-year rally. In November 2021, TSLA peaked some 1,500% above its Aug. 7, 2018, excessive after factoring in inventory splits.
Even with TSLA’s huge pullback over the previous yr, the inventory’s shut Friday at $189.98 represents a greater than 635% acquire from its Aug. 7, 2018, intraday peak after taking inventory splits under consideration.
In search of Alpha contributors are divided on the place Tesla (TSLA) goes from right here. Columnist Alpha Funding Analysis not too long ago laid out a “Purchase” case for the inventory, whereas contributor Sean Chandler gave TSLA a “Promote” score.
