- Elon Musk’s “funding secured” tweet cost Tesla investors $12 billion in only 10 days, a jury was told per Bloomberg.
- Michael Hartzmark of Forensic Economics said investors who took each long and short positions were burned.
- Musk is being sued after indicating in 2018 that he had funding in place to take Tesla private at $420 a share.
The “funding secured” tweet at the middle of a lawsuit against Elon Musk cost Tesla investors $12 billion within the space of 10 days, a jury was reportedly told.
Michael Hartzmark of Forensic Economics told a jury in a market manipulation trial against the Tesla CEO that his 2018 tweet, where he said he was considering taking the corporate private, did “consequential harm” to investors, per Bloomberg.
Musk is being sued by a gaggle of investors who said his tweet caused huge losses for those holding each long and short positions on the stock, together with his comments forcing wild fluctuations in its price. The $12 billion loss figure is attributed to all investors, reasonably than only those suing Musk, and never indicative of the damages being sought by plaintiffs.
After Musk’s tweet on August 7, which read “Am considering taking Tesla private at $420. Funding secured,” Tesla’s share price jumped 10%. It continued to rise, but fell back because the veracity of the tweet was interrogated and an investigation was opened by the SEC.
It was reported that across the time that Tesla short sellers lost out on $3 billion because of this of the tweet. Those that took long positions were also burned when his claim got here to nothing.
“Uncertainty is the kryptonite of investors,” Bloomberg reported Hartzmark as saying. “As this went drip, drip, drip over time it could have a negative impact” on the share price.
The Twitter owner has said he was confident his tweet about having funding secured was accurate based on conversations he had had with Yasir Al-Rumayyan, the governor of Saudi Arabia’s Private Investment Fund, who he said had “verbally” expressed support for the plan.
Hartzmark argued the knowledge Musk conveyed in his tweet was “material” to potential investors, as demonstrated by emails to the corporate’s investor relations office on the time of the post, per Bloomberg.
However the publication added Hartzmark was forced by Musk’s lawyer Andrew Rossman to just accept that the primary a part of Musk’s tweet, that he was considering taking the corporate private, was accurate.
Tesla didn’t immediately reply to Insider’s request for comment.