Musk expected to take stand as trial resumes over Tesla tweet

Musk insisted he had investor backing for a deal in 2018 which never came together and which shareholders allege cost them millions in losses.

  Twitter logo and a photo of Elon Musk are displayed through magnifier in this illustration taken October 27, 2022.  (photo credit: REUTERS/DADO RUVIC/ILLUSTRATION)
Twitter logo and a photo of Elon Musk are displayed through magnifier in this illustration taken October 27, 2022.
(photo credit: REUTERS/DADO RUVIC/ILLUSTRATION)

Elon Musk, Tesla Inc's chief executive, is likely to be called to testify on Friday in a jury trial over his 2018 tweet that he had "funding secured" to take the electric carmaker private, which shareholders allege cost them millions in trading losses.

The class action trial in San Francisco federal court resumed with the plaintiffs calling Timothy Fries to testify about his reasons for investing in Tesla stock and the losses he suffered, allegedly due to Musk's tweet.

Unusual conduct

Musk is listed as the third possible witness on Friday, following Guhan Subramanian, a Harvard Law School professor who is expected to tell the jury how Musk's conduct in 2018 deviated from a typical management buyout, according to court documents.

Musk, known for combative testimony, is expected to address why he has insisted he had Saudi investor backing for the deal, which never came together, and whether he knowingly made a materially misleading statement with his tweet.

The case is a rare securities class action trial and the plaintiffs have already cleared high legal hurdles, with US Judge Edward Chen ruling last year Musk's tweet was untruthful and reckless.

 Elon Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany on March 22.  (credit: Patrick Pleul/Pool/REUTERS) Elon Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany on March 22. (credit: Patrick Pleul/Pool/REUTERS)

Shareholder attorney Nicholas Porritt told the jury in his opening statements on Wednesday that Musk lied when he sent the tweet, costing investors like Glen Littleton, the lead plaintiff.

Musk's attorney, Alex Spiro, countered in his opening statement that Musk believed he had financing from Saudi backers and was taking steps to make the deal happen. Fearing leaks to the media, Musk tried to protect the "everyday shareholder" by sending the tweet, which contained "technical inaccuracies," Spiro said.

There were no proceedings on Thursday.

A jury of nine will decide whether the tweet artificially inflated Tesla's share price by playing up the status of funding for the deal, and if so, by how much.

The defendants include current and former Tesla directors, whom Spiro said had "pure" motives in their response to Musk's plan.