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Elon Musk testifies that multiple funding streams made Tesla’s “funding secured” tweet true [Video]

During a third day on the witness stand, Tesla (TSLA) CEO Elon Musk stood firm in his position that he was honest when tweeted in 2018 that he had obtained funds to privatize the electric vehicle company.

“It’s absolutely what I thought,” Musk said Tuesday when questioned by his lawyer, Alex Spiro, about his disputed tweet. During more than three hours of testimony, Musk elaborated on the main themes of his previous testimony to support his claim that the funding was secured.

Musk’s testimony promises to serve as key evidence for a jury to evaluate the ongoing federal class action lawsuit brought by a group of Tesla shareholders who say they lost money when they traded in the company’s stock based on the tweets.

August 7, 2018 Tweet from Elon Musk

On Tuesday, Musk again pointed out that multiple funding sources were available for a take-home transaction, including the Saudi Arabian Public Investment Fund which had verbally committed itself in meetings before the tweet to help him take the company private.

“We are talking about the Kingdom of Saudi Arabia here. They have the money to take Tesla private multiple times,” Musk said.

Alternatively, he said, he could have raised funds from other sources, or sold SpaceX shares, if the Saudi financing fell through.

“Financing was not an issue at all,” Musk said, adding that he ultimately scrapped plans to go private after Tesla’s smaller shareholders expressed a preference for keeping the company public.

Other wealthy individuals and investment funds have also expressed interest in supporting or participating in a private transaction, Musk said, including Egon Durban, managing partner at Silver Lake; Ron Barron, a billionaire investor; and Dan Dees, co-head of global investment banking at Goldman Sachs.

According to Musk, Yasir Al-Rumayyan, a representative of the Saudi fund that is outside US jurisdiction and refused to testify in the case, called Durban to confirm that the fund wanted to take Tesla private. And Dees, Musk said, wrote an email to Musk saying Musk’s proposed structure and rationale for the deal made “perfect sense.”

Tesla CEO Elon Musk is questioned by investors & # 39;  Attorney Nicholas Porritt stands before Judge Edward Chen as a screen displays one of Musk's tweets, during a securities fraud trial in federal court in San Francisco, California, U.S., on January 23, 2023 in this courtroom sketch.  REUTERS/Vicki Behringer

Tesla CEO Elon Musk is questioned by investors’ attorney Nicholas Porritt before Judge Edward Chen as a screen shows one of Musk’s tweets, during a securities fraud trial in federal court in San Francisco, California, USA, on January 23, 2023 in this room. Sketch. REUTERS/Vicki Behringer

On Monday, Musk said advance notice he received of a soon-to-be-published Financial Times news report was “the driving factor” behind his decision to post the tweet at the center of the case.

“I did everything possible to keep shareholders informed and to make sure all shareholders had the same information,” Musk reiterated during Tuesday’s testimony.

Musk admitted that no specific dollar figure for the funding had been discussed with any of Tesla’s potential investors. Doing so, he said, would have been premature because he had not yet asked shareholders if they would vote to go private or want to retain any ownership in a private Tesla. He said the amount of investor financing needed would rise or fall depending on shareholder interest in retaining the property.

Musk further testified that his track record of raising more than 100 oversubscribed rounds of financing, sometimes in a matter of hours, gave him additional assurance that he could easily raise money to take Tesla private, regardless of commitments from outside investors.

“I think all the funding rounds I’ve done are oversubscribed,” the billionaire said.

Pressed by his assertion that selling his private SpaceX shares was a viable financing alternative, Musk pointed to the value of his holdings and his recent acquisition of Twitter.

I am the majority shareholder of [SpaceX] and that would allow me to sell a large part of SpaceX to take [Tesla] private,” Musk testified. “That’s exactly what I did to take Twitter private.”

Musk also said he hoped his “funding secured” tweet would be read in conjunction with his subsequent tweets published the same day and with a blog post Tesla posted on its website.

However, he retracted Monday’s testimony saying he thought Tesla’s stock price would likely rise after the controversial tweet.

On the stand Monday, Musk also admitted that the alleged Saudi deal had not been recorded in any signed documents.

SAN FRANCISCO, CALIFORNIA - JANUARY 24: Tesla CEO Elon Musk leaves the Phillip Burton Federal Building on January 24, 2023 in San Francisco, California.  Musk testified in a lawsuit trial in which investors sued Tesla and Musk over their August 2018 tweets that said he was taking Tesla private with funds he obtained.  The tweet was found to be false and cost shareholders billions of dollars when Tesla's stock price began to fluctuate wildly, allegedly based on the tweet.  (Photo by Justin Sullivan/Getty Images)

Tesla CEO Elon Musk leaves the Phillip Burton Federal Building on January 24, 2023 in San Francisco, California. Musk testified in a lawsuit trial in which investors sued Tesla and Musk over their August 2018 tweets that said he was taking Tesla private with funds he obtained. The tweet was found to be false and cost shareholders billions of dollars when Tesla’s stock price began to fluctuate wildly, allegedly based on the tweet. (Photo by Justin Sullivan/Getty Images)

At stake is an approximate $12.6 billion swing in Tesla’s market capitalization over a 10-day period that shareholders say can be attributed, at least in part, to Musk’s tweets. The shareholder lawsuit alleges that Musk’s tweets caused the fluctuation, with shares rising in the wake of the tweet, then falling once the deal was off the table.

According to shareholders, Musk illegally manipulated the stock price and he and Tesla’s board of directors should be held accountable for an unspecified portion of billions of dollars in damages suffered by those who bought or sold company shares after the tweet and until August 17. 2018.

To win their case, shareholders must show that, at the time of the tweets, Musk knew that the information contained in them was materially false and that the information led them to buy or sell Tesla stock to his detriment.

Senior District Court Judge Edward Chen, who is presiding over the case, has already ruled, instructing the nine-member jury that Musk’s funding statement was untrue. The jurors are therefore tasked with deciding whether the tweets were material (those a reasonable investor would rely on to make investment decisions) and whether Musk believed his tweets were true or false.

In a separate case filed by the US Securities and Exchange Commission in response to the funding tweet, Musk and Tesla settled the matter, each paying a $20 million fine. Musk also agreed in the settlement to resign as Tesla’s chairman of the board and to have Tesla’s general counsel review potentially “material” tweets before they are published. Musk is currently trying to dissolve that part of the agreement.

Musk’s testimony concluded Tuesday. The trial is scheduled to proceed with additional witnesses taking the stand on Wednesday. The trial is expected to last approximately two more weeks.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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