According to estimates submitted on Tuesday at a trial examining the sloppy management of the buyout plan, investors lost billions of dollars when Elon Musk tweeted that he had the financing to take Tesla private in 2018.
During the final week of the three-week trial, a nine-person jury will be faced with the mind-boggling figures given out by two experts hired by attorneys representing Tesla stockholders. Judge Edward Chen of the United States District Court plans to present the case to the jury this coming Friday.
Musk and his electric automobile could face further financial consequences due to his erratic behavior on Twitter, which he now owns. After Musk’s controversial tweets in August 2018, he and Tesla agreed to a $40 million deal with securities authorities without admitting wrongdoing.
Recently, we reported on some Elon Musk-related news; if you’re interested in reading it, you may access the articles via the links provided below:
- Elon Musk Becomes The First Person In History To Lose $200 Billion.
- Elon Musk Will Step Down As Twitter CEO Once He Finds A “Foolish Enough” Replacement.
- Elon Musk “SECRET SURGERY” Picture out! Why Did He Spend $172k On This?
For the class action lawsuit filed on behalf of Tesla shareholders, the first question for the jury to answer is whether or whether two tweets issued by Musk unexpectedly on August 7, 2018, misled Tesla investors. If the jury agrees with Chen that Musk should pay for the bogus tweets, they will have to determine how much Musk, one of the world’s wealthiest individuals, and Tesla should pay.
Economist Michael Hartzmark, one of Tuesday’s two experts, evaluated a paper that used phrases like “but-for” and “consequential inflation” to argue that Tesla shareholders may have incurred losses of $4 billion to $11 billion, or $22.55 to $66.67 per share, over a 10-day period in August 2018.
Steven Heston, a finance professor at the University of Maryland, reviewed an even more detailed report that looked at the effect Musk’s tweets had on over 2,000 different Tesla stock options. The report relied heavily on a formula called the Black-Scholes model, which is commonly used by companies to value executive compensation packages.
A lawyer for Musk questioned Heston’s model’s accuracy, and the actor responded, “All models deviate from reality, which is why they are models.” Although Heston claimed to have been paid between $300,000 and $350,000 for his efforts on the case, he refrained from providing a specific estimate of the investor damages, stating instead that it was the responsibility of the jury.
Musk’s tweet from August 7, 2018, in which he claimed “financing secured” to take Tesla private, is essential to the case. According to Musk’s testimony, he hurriedly sent out the tweet minutes before boarding his private jet after being tipped off that the Financial Times was about to publish a story claiming that Saudi Arabia’s Public Investment Fund had spent about $2 billion buying a 5% stake in Tesla to diversify its interests beyond oil.
A few hours later, Musk followed up with another post implying a deal was imminent, leading many to question whether his Twitter account had been hacked or he was joking.
Musk testified under oath for around eight hours, during which he argued numerous times that he was acting in the best interests of Tesla’s shareholders and that he had a financial commitment from the Saudi fund despite the fund’s subsequent recantation of his “funding secured” tweet. Which is presently being deleted by Elon Musk the reason is yet unknown, however, we did reference the tweet image below.
Musk stated he could have completed the purchase with further funding from investors and the sale of some of his stake in SpaceX. SpaceX is Musk’s rocket ship manufacturing company.
In the end, Musk and Tesla’s other big owners agreed that the electric manufacturer should continue to be publicly listed, a move that has been profitable for all involved. Taking into account two stock splits that have occurred since Musk’s buyout tweet, the current value of a Tesla share is more than eight times what it was at the time of Musk’s tweet.
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