Bea Beltran Tech 01.23.2023 22:Jan PM EST

Elon Musk Addresses $420 Per Share Tweet in Securities Fraud Trial

People don't usually care much about what they tweet because it's unlikely that it'll cause them trouble. It's a different case for Elon Musk since he runs several tech companies, yet he hasn't been acting like it at all, so much so that a 420-related tweet put him in court.

A Coincidence? Perhaps

The Tesla CEO is being accused of securities fraud due to a tweet saying that he was taking Tesla private for $420 a share. Tesla inventors claimed that the tweet about Tesla going private has caused them millions of dollars, as well as the "420" and "funding secured" part.

Nicholas Porritt, the attorney representing the Tesla investors who filed the lawsuit against Musk, asked the CEO if he rounded up the price as a joke for his girlfriend. Musk responded by saying that he was serious and that there was karma around the number.

Either way was not a good case for the plaintiff. Based on Musk's statement, he was seriously committed to taking Tesla private, contradicting the accusation of fraud. It's also likely that no one in the business world would take "420" seriously anyway to cause any loss of money.

When asked again, Musk clarified that 420 was not chosen because of a joke, but because there was a 20 percent premium over the stock price. He added that it was all just a coincidence. The tweet was prompted by the supposed support from Saudi Arabia's PIF.

According to The Verge, the company was targeted by Wall Street sharks and short sellers who were betting against the company, and Musk was simply seeing the "firm commitment" from Saudi Arabia's Public Investment Fund as a way to protect the company's future.

However, Porritt acknowledged that there were no signed documents and the deal was sealed with only just a handshake. He also pointed out that Musk announced it without consulting his own board or considering how it might affect shareholders.

The plaintiffs' lawyer continued to press Musk, implying that investor support was not actually confirmed and yet Musk tweeted it anyway. Judge Edward Chen already ruled the 2018 tweets to be false, which will be a factor in the jury's decision.

What Happens Now?

The outcome of the trial will depend on how the jury took Musk's statements. If Tesla investors win the case, Musk will be paying billions in damages, according to The New York Times. Musk winning the case will just emphasize that his tweets are not to be taken seriously.

Should Musk take Tesla private, he will have to come up with a large sum quickly. It's possible that Musk will use the same strategy he did when he acquired Twitter, wherein he sold Tesla shares in order to fund the $44 billion deal.

He mentioned that "funding secured" was not only because of the potential Saudi Arabia fund, but also his stake as CEO of SpaceX. In theory, he could borrow against his stake or sell some of his stock to fund the effort of taking Tesla private.