A San Francisco jury ruled Friday in Tesla founder Elon Musk’s favor in a class-action shareholder lawsuit over his 2018 “funding secured” tweet, wherein the entrepreneur questionably claimed to have financing lined as much as take Tesla (NASDAQ:TSLA) private.
“Thank goodness, the wisdom of the people has prevailed!” Musk tweeted Friday after jurors in a federal civil trial found on his behalf. “I’m deeply appreciative of the jury’s unanimous finding of innocence within the Tesla 420 take-private case.”
Class-action lawyers representing shareholders of Tesla (TSLA) sued over an Aug. 7, 2018, tweet wherein Musk wrote: “Am considering taking Tesla private at $420. Funding secured.”
The tweet sent TSLA soaring 11% to as high as $387.46 that day, although the stock failed to achieve $420 because the take-private idea foundered. It also turned out that while Musk had talked to Saudi investors about providing financing for a take-private deal, such funding arguably wasn’t truly “secured.”
TSLA stock eventually sank as much as some 35% intraday a month after Musk’s tweet, and the take-private deal never went forward.
Lawyers representing shareholders claimed that Musk unfairly sent TSLA’s stock price higher by overstating how solid the deal’s financing was. Had they prevailed, a court could have ordered Musk to pay billions of dollars in damages.
The U.S. Securities and Exchange Commission also previously sued Musk over the incident, reaching an out-of-court settlement wherein he and Tesla (TSLA) each paid $20M and Musk gave up his chairmanship of the EV maker. Friday’s jury verdict got here in an unrelated case brought on behalf of individual stockholders.
Musk last month testified in his own defense on the San Francisco trial, saying that the Saudi investors he spoke with “unequivocally” desired to help take the corporate private.
And while Telsa (TSLA) originally fell when the take-private deal got here apart, the stock later began a multi-year rally. In November 2021, TSLA peaked some 1,500% above its Aug. 7, 2018, high after factoring in stock splits.
Even with TSLA’s big pullback over the past yr, the stock’s close Friday at $189.98 represents a greater than 635% gain from its Aug. 7, 2018, intraday peak after taking stock splits under consideration.
Looking for Alpha contributors are divided on where Tesla (TSLA) goes from here. Columnist Alpha Investment Research recently laid out a “Buy” case for the stock, while contributor Sean Chandler gave TSLA a “Sell” rating.