While still grappling with the fallout from a company he did take private, beleaguered billionaire Elon Musk is now facing a trial over a company he didn91ÂãÁÄÊÓƵ™t.
Long before in October, he had set his sights on Tesla, the electric automaker where he continues to serve as CEO and from which he derives most of his wealth and fame.
Musk claimed in that he had lined up the financing to pay for a $72 billion buyout of Tesla, which he then amplified that made a deal seem imminent.
But the buyout never materialized and now Musk will have to explain his actions under oath in a federal court in San Francisco. The trial, which begins on Tuesday with jury selection, was triggered by a class-action lawsuit on behalf of investors who owned Tesla stock for a 10-day period in August 2018.
Musk91ÂãÁÄÊÓƵ™s tweets back then fueled a rally in Tesla91ÂãÁÄÊÓƵ™s stock price that abruptly ended a week later, after it became apparent that he didn91ÂãÁÄÊÓƵ™t have the funding for a buyout after all. That resulted in him to take the automaker private, culminating in a with U.S. securities regulators that also required him to step down as the company91ÂãÁÄÊÓƵ™s chairman.
Musk has since contended he entered that settlement under duress and maintained he believed he had locked up financial backing for a Tesla buyout during meetings with representatives from Saudi Arabia91ÂãÁÄÊÓƵ™s Public Investment Fund.
The trial91ÂãÁÄÊÓƵ™s outcome may hinge on the jury91ÂãÁÄÊÓƵ™s interpretation of Musk91ÂãÁÄÊÓƵ™s motive for tweets that U.S. District Judge Edward Chen has already .
Chen dealt Musk another setback on Friday, when he to a federal court in Texas, where Tesla moves its headquarters in 2021. Musk had argued that negative coverage of his Twitter purchase had poisoned the jury pool in the San Francisco Bay Area.
Musk91ÂãÁÄÊÓƵ™s leadership of Twitter 91ÂãÁÄÊÓƵ” where he has and alienated users and 91ÂãÁÄÊÓƵ” has proven unpopular among Tesla91ÂãÁÄÊÓƵ™s current stockholders, who are worried he has been devoting less time steering the automaker at a time of intensifying competition. Those concerns contributed to a 65% percent decline in Tesla91ÂãÁÄÊÓƵ™s stock last year that wiped out more than $700 billion in shareholder wealth 91ÂãÁÄÊÓƵ” far more than the $14 billion swing in fortune that occurred between the company91ÂãÁÄÊÓƵ™s high and low stock prices during the Aug. 7-17, 2018 period covered in the class-action lawsuit.
The lawsuit is based on the premise that Tesla91ÂãÁÄÊÓƵ™s shares wouldn91ÂãÁÄÊÓƵ™t have traded at such a wide range if Musk hadn91ÂãÁÄÊÓƵ™t dangled the prospect of buying the company for $420 per share. Tesla91ÂãÁÄÊÓƵ™s stock has split twice since then, making that $420 price worth $28 on adjusted basis now. The shares closed last week at $122.40, down from its November 2021 split-adjusted peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame a production problem, resulting in a rapid upturn in car sales that caused its stock to soar and minted Musk as the world91ÂãÁÄÊÓƵ™s richest person until he bought Twitter. Musk dropped from the top spot on the wealth list after the stock market91ÂãÁÄÊÓƵ™s backlash to his handling of Twitter.
The trial is likely to provide insights into Musk91ÂãÁÄÊÓƵ™s management style, given the witness list includes some of Tesla91ÂãÁÄÊÓƵ™s current and former top executives and board members, including luminaries such as Larry Ellison, Oracle co-founder, as well as James Murdoch, the son of media mogul Rupert Murdoch. The drama also may shed light on Musk91ÂãÁÄÊÓƵ™s relationship with his brother, Kimbal, who is also on the list of potential witnesses who may be called during a trial scheduled to continue through Feb. 1.
91ÂãÁÄÊÓƵ”Michael Liedtke, The Associated Press
