Why is Elon Musk being sued by Tesla shareholders?

Billionaire may take the stand as he defends infamous 2018 tweet

Tesla chief executive Elon Musk speaks beside a Tesla vehicle at a manufacturing facility in Austin, Texas. AP
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Elon Musk is on trial in San Francisco, California, where investors are suing the Tesla chief executive for financial losses they suffered following some now infamous tweets.

What is the case about?

Mr Musk is accused of securities fraud for tweets he posted in 2018 in which he claimed he was preparing to take Tesla private through a $72 billion buyout.

“Am considering taking Tesla private at $420. Funding secured,” a tweet from August 7, 2018, reads.

He doubled down on the comment with follow-up comments that made a deal seem imminent, though no deal ever took place.

Investors - represented by Tesla investor Greg Littleton - who traded in the wake of the tweets accuse Mr Musk of misleading shareholders, leading them to lose millions of dollars during the ups and downs the stock experienced in the days following.

Are these cases common?

Many shareholders sue companies and individuals for securities fraud when they suffer losses.

However, accusations do not often make it to court, as most defendants settle or courts dismiss the cases, making this securities fraud trial relatively rare.

Nine members of a jury in San Francisco will decide if Mr Musk's Twitter posts led to increase Tesla's share price upon the news of funding for a private deal.

Will Mr Musk take the stand?

The former world's richest person is on the witness list for both sides in the trial and could take the stand, The Associated Press reported.

It is not the first time the billionaire has taken the stand, as he testified under oath during court proceedings about his Tesla pay package.

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Updated: January 19, 2023, 3:06 AM
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