Elon Musk, the CEO of Tesla and the owner of Twitter, is once again in the public eye, but this time due to the trial, the outcomes of which have been expected for some time. Musk is being sued over a tweet in which he claimed to have $72 billion to take over Tesla when the electric vehicle manufacturer was worth far less than it is now.
Elon Musk has lately dealt with a slew of business issues, including a billion-dollar loss at the end of last year. We remind you that following the decrease in share prices, Musk lost first position on the list of the world’s richest individuals, and was surpassed by Bernard Arnault and his family – CEO of LVMH with a fortune of an amazing 220.4 billion.
Read on to find out how Musk handled the just concluded trial and what can we learn from it!
On August 7, 2018, Musk confirmed in a tweet that he had secured financing for the purchase of Tesla worth $72 billion, which he then supported with an additional statement that convinced many that the deal was inevitable. In the end, that didn’t happen, and the value of Tesla’s stock fluctuated wildly.
Musk’s tweets boosted the value of Tesla shares at a time when it became clear that there were no funds for a buyout, but that ended abruptly. Musk then abandoned a plan to take the automaker private, resulting in a $40 million settlement with the Securities and Exchange Commission (SEC).
As part of the settlement, Musk also had to step down as chairman of the company’s board and took over the position of executive director. It also required that any tweets he put out containing significant information regarding Tesla be pre-approved by other corporate leaders.
He said he signed into the deal under pressure, believing he would get funds from the Saudi Public Investment Fund to buy back and dispose Tesla shares.
Musk feels that the lawsuit is the result of unfavorable coverage of his records, which he says “poisoned” a group of investors in San Francisco who are now suing him.
Last year, Tesla stock dropped 65 percent of its value, wiping away $700 billion in assets. Shareholders reportedly lost $14 billion between August 7 and August 17, 2018, according to the lawsuit.
Investors in the case claim that if Musk had not tweeted about the planned takeover, Tesla’s stock would not have changed as much. However, immediately after the reckless takeover, the business addressed manufacturing challenges, resulting in a dramatic spike in automobile sales, sending the stock skyrocketing.
Tesla (TSLA) shares originally increased 11% on the day of Musk’s initial “funding secured” tweet, but they never hit the projected $420 mark, reaching a high of $387.46 that day. They quickly slid significantly below their pre-tweet price of $344, reaching $263.24 a month later when it became evident that the money was less than secured. This sparked the shareholder claim, which is only now nearing trial after more than four years.
A change from losses to profits approximately a year after the tweet set Tesla shares on an amazing run, rising 1520% from the day of the tweet to its record high in November 2021. When adjusted for the two stock dividends since that day, that record close of $409.97 comes out to $6,150 per share.
Despite a 70% drop in Tesla shares from that all-time high to Friday’s close, the stock is still up 384% from the closing on the day of the 2018 tweet.
According to CNN, “plaintiffs” who sued Musk for the loss of major sections of their assets as a result of the share price fluctuation following the tweet are seeking monetary compensation from Elon and other Tesla directors.
After a three-week trial over a class-action shareholder lawsuit based on the tweet, a California jury concluded that Elon Musk is not accountable for Tesla shareholders’ losses.
Musk would be sentenced to pay billions of dollars in damages if proven guilty. The class action decision was reached in less than two hours by nine jurors on Friday afternoon.
This judgment, announced on Friday in the US District Court, cleared Musk of all culpability, infuriating many of the investors who had sued him. The jury did, however, find that the investors had failed to prove any of their four allegations against Musk and the other defendants.
During the trial, Musk specifically requested that the trial be held in Texas, where Tesla is headquartered, and not in San Francisco. He thought that a trial at a different location would have been fairer, but certainly everything turned out well for him in the end.
“We are upset with the ruling and are exploring next measures,” Nicholas Porritt, a lawyer for Tesla stockholders, told CNN.
During his defense, Musk stated that he believes that his tweet has nothing to do with the increase or decrease of Tesla shares.
“The causal relationship is clearly not there simply because of a tweet,” Musk said.
Two words: “funding secured.” They caused quite a stir, both for Musk and for all Tesla owners and investors. Huge losses prolonged the trial for up to four years, all because of a single tweet from a very powerful guy. Glen Littleton, the primary plaintiff in the shareholder litigation, testified last month that he lost more than 75% of his assets as a result of Musk’s “funding secured” tweet.
Last October, after a long announcement of the purchase, Musk finally acquired the popular social network Twitter, and included it in another of his many successful companies.
However, as much as buying Twitter for 44 billion brought him happiness, it cost him as much money. Musk put his other companies in danger last fall because of his praise for buying this social network. Because of his reckless moves, many of his companies’ shares started going down. By the end of December, he lost more than 200 billion, and lost his position as the richest man in the world.
After all these events related exclusively to Twitter, it is ironic that Musk used that very network to boast about his victory in court against investors. In several statements, Musk has spoken his mind about the lawsuit.
First he said “Thank heavens, the wisdom of the people has won!”, which was immediately followed by “I deeply appreciate the jury’s unanimous verdict of innocence in the Tesla 420 private case”.
No matter how many challenges Musk faces on a daily basis, somehow he always comes out on top with nothing but victory in his hands.
From the huge loss of money in the amount of 200 billion at the end of last year – a record that is even unknown in Guinness’s book until now, to the end of this trial that stretched for more than 4 years, Musk has not been bypassed by life’s challenges lately.
They say that small people have small problems, and big people have huge problems, which just proves the fact that a genius like Musk can’t seem to take a break from action.
What we should surely learn from Musk is that big risks can result in either big gains or losses. In any case, it is sometimes necessary to take risks or gamble on yourself with the ultimate goal of improving your life even more. It is important to stay positive in every situation, concentrate on what you have, not what you have lost, and constantly work on increasing your possessions.
If we want to be billionaires, we should first act like them – someone very wise once said. Using this saying, it follows that if we want to achieve even a fraction of what Musk has, we should remain optimistic in every situation. If a man who until recently lost 200 billion of his hard-earned money can do it – then surely we can too, right?
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