Tesla CEO Elon Musk appeared in federal court in San Francisco on Friday defending tweets he posted to his tens of millions of followers in August 2018 for a such agreement has been "confirmed".
Trading in Tesla stock initially stalled after the tweets, then the stock fluctuated wildly for weeks. Musk later said he was in discussions with Saudi Arabia's sovereign wealth fund and was confident the funding would come at the proposed price. An agreement never materialized.
The SEC charged Musk and Tesla with civil securities fraud following the tweets. Musk and Tesla each paid $20 million in fines to the agency and reached an amended settlement that required Musk to temporarily step down from his role as Tesla's chairman of the board.
His 2018 tweets also sparked a shareholder class action lawsuit from Tesla investors. They allege Musk's tweets mislead them and say that relying on his statements to make deals cost them a significant amount.
The shareholder transactions in question took place over the 10-day period before Musk appeared to admit that a privatization deal would not happen in 2018.
Musk was sworn in on Friday that he could hardly tie Tesla's stock price to his tweet.
"There are many cases where I think if I tweet something the stock price will go down," Musk said. "For example, at one point I tweeted that I thought the stock price was too high...
and he went higher, you know, counter-intuitive.
Trading volume surges after tweet
Senior executives of publicly traded companies rarely discuss their stock prices, as any comment can affect variables. price movement.
Daniel Taylor, director of the Wharton Forensic Analytical Laboratory and professor at the University of Pennsylvania, analyzed every Tesla stock trade that took place on August 7, 2018, the date Musk tweeted. It calculates the total volume of transactions per minute from the time the market opened until the time of Musk's tweets about the acquisition.
Taylor saw the volume as soon as Musk tweeted, at 12:48 pm. ET that day exceeded $350 million, and the next minute Tesla stock trading volume exceeded $250 million. For comparison, the average volume five minutes before Musk tweeted was 32 million per minute. One minute before Musk tweeted, the trading volume was $24 million. "Generally speaking, correlation is not causation," Taylor told on Friday, after Musk's first day on the witness stand. "However, I don't know of any alternative explanations for the 10x increase in trading volume as soon as Elon Musk tweeted."
Musk also testified about his low stance towards short sellers on Friday. "I think short selling should be illegal," Musk said, calling short sellers "the bad guys on Wall Street" who "robber" other investors. He said they have also spread stories in the media to "lower the stock price" and will "do everything in their power to kill a company."
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