During a third day on the witness stand, Tesla (TSLA) CEO Elon Musk stuck to his position that he was honest when he tweeted in 2018 that he had secured funding to take the electric-vehicle company private.
“It’s absolutely what I believed,” Musk said Tuesday under questioning from his lawyer, Alex Spiro, about his disputed tweet. During three plus hours of testimony, Musk elaborated on the main themes from his prior testimony to back up his contention that funding was secured.
Musk’s testimony promises to serve as key evidence for the jury to weigh in the ongoing federal-class action lawsuit brought by a group of Tesla shareholders who say they lost money when they traded the company’s stock based on the tweets.
On Tuesday, Musk again noted that multiple sources of funding were available for a take-private transaction, including Saudi Arabia’s Public Investment Fund that had verbally committed in meetings before the tweet to help him privatize the company.
“We are talking about the Kingdom of Saudi Arabia here. They have the money to take Tesla private several times over,” Musk said.
Alternatively, he said, he could have raised funding from other sources, or sold SpaceX shares, if Saudi financing fell through.
“Funding was absolutely not an issue,” Musk said, adding that he ultimately scuttled take-private plans after smaller Tesla shareholders expressed a preference to keep the company public.
Other wealthy individuals and investment funds had also expressed interest in supporting or participating in a take-private transaction, Musk said, including Egon Durban, managing partner for Silver Lake; Ron Barron, a billionaire investor; and Dan Dees, co-head of global investment banking for Goldman Sachs.
According to Musk, Yasir Al-Rumayyan, a Saudi fund representative who is outside the U.S. jurisdiction and declined to testify in the case, called Durban to confirm the fund wanted to take Tesla private. And Dees, Musk said, wrote an email to Musk saying that Musk’s proposed structure and rationale for the deal made “perfect sense.”
On Monday, Musk said that advance notice he received of a soon-to-publish Financial Times news report was “the driving factor” behind his decision to post the tweet at the heart of the case.
“I was trying my best to keep shareholders informed and insure that all shareholders had the same information,” Musk reiterated during Tuesday’s testimony.
Musk admitted that no specific dollar figure for funding had been discussed with any of Tesla’s perspective investors. Doing so, he said, would have been premature because he had not yet asked shareholders if they would vote for privatization, or if shareholders would want to retain any ownership in a private Tesla. The amount of investor funding needed, he said, would increase or decrease depending on shareholder interest in retaining ownership.
Musk further testified that his track record of raising more than 100 oversubscribed funding rounds, sometimes within hours, gave him additional assurance that he could easily raise money to take Tesla private, regardless of commitments from outside investors.
“I believe every funding round I’ve ever done is oversubscribed,” the billionaire said.
Pressed about his claim that a sale of his private SpaceX stock was a viable financing alternative, Musk pointed to the value of his holdings, and to his recent acquisition of Twitter.
“I am the majority shareholder in [SpaceX] and that would enable me to sell a large portion of SpaceX to take [Tesla] private,” Musk testified. “That is exactly what I did to take Twitter private.”
Musk also said that he expected his “funding secured” tweet to be read together with his subsequent tweets posted the same day and with a blog post that Tesla posted to its website.
However, he recanted Monday testimony saying that he thought Tesla’s stock price would probably go up after the controversial tweet.
On the stand Monday, Musk also admitted that the purported Saudi deal hadn’t been memorialized in any signed documents.
At sake is an approximate $12.6 billion swing in Tesla’s market capitalization during a 10-day window that the shareholders say is at least in part attributable to Musk’s tweets. The shareholders’ lawsuit alleges that Musk’s tweets caused the fluctuation, with the stock rising in the wake of the tweet, then tumbling once the deal was off the table.
According to the shareholders, Musk illegally manipulated the stock price and he and Tesla’s board should be held accountable for an unspecified portion of billions of dollars in damages sustained by those who bought or sold the company’s stock after the tweet and up until Aug. 17, 2018.
To win their case, the shareholders must prove that, at the time of the tweets, Musk knew the information within them was materially false and that the information caused them to buy or sell Tesla shares to their detriment.
Senior District Court Judge Edward Chen, who is presiding over the case, has already ruled and instructed the nine-member jury that Musk’s funding statement was untrue. Jurors are therefore tasked with deciding whether the tweets were material — those that a reasonable investor would rely on in making investment decisions — and whether Musk believed his tweets to be true or false.
In a separate case brought by the U.S. Securities and Exchange Commission in response to the funding tweet, Musk and Tesla settled the matter, each paying a fine of $20 million. Musk also agreed in the accord to step down as Tesla’s board chairman and to have Tesla’s general counsel review potentially “material” tweets before they are posted. Musk is currently seeking to have that part of the settlement dissolved.
Musk’s testimony concluded Tuesday. The trial is scheduled to continue 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.