How did Elon Musk lose $200 billion of his fortune?
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New York (CNN) --
A four-year-old tweet from Elon Musk has the Tesla CEO back in court on Tuesday.
Musk, Tesla and other company executives are facing a shareholder lawsuit over his now-infamous 2018 tweet, in which he said he was considering taking Tesla private at a price of $420 a share.
If the tweet had ended right there, we wouldn't be talking about it any further, nor would the mogul be facing a lawsuit seeking unspecified damages.
But Musk concluded with two words that have cost him millions of dollars in fines and legal fees: "Funding secured."
It turned out that although Musk had spoken with Saudi sovereign wealth fund executives about the money he would need to take Tesla private, the funding was anything but "secured."
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Tesla shares initially rose 11% on the day of his original tweet, but never reached the promised level of $420, reaching a high that day of $387.46.
And they soon fell well below their pre-publication price of $344, reaching $263.24 a month later, when it became clear that funding was not secured.
That sparked the shareholder lawsuit that just went to trial after more than four years.
A year after the tweet, Tesla shares went from loss to gain in an extraordinary rally, rising 1,520% from the day of the tweet to its all-time high in November 2021. That record close of $409.97 equals US$6,150 per share, when adjusted for the two share splits from that day.
Even with Tesla's shares plummeting 70% from that all-time high through Friday's close, the stock is still up 384% since the close on the day of the 2018 tweet.
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Musk's post also sparked a civil lawsuit by the Securities and Exchange Commission (SEC), the federal agency tasked with protecting investors by requiring executives to tell the truth.
Initially, the entity intended to strip him of his position as CEO of Tesla.
But he ultimately settled with Musk in which he and Tesla agreed to pay a $20 million fine each, and Musk relinquished his title as company president but retained that of CEO.
He also demanded that any tweets he sent containing material information about Tesla be reviewed by other company executives.
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Musk later admitted that he only agreed to the deal because continuing to fight would have caused banks to cut off the funding Tesla needed to survive, which was then losing money and facing a liquidity crisis.
At a TED conference last year, Musk compared negotiations with the SEC to someone pointing a gun at his son.
But despite his claims to have the funding secured, federal judge Edward Chen, who is handling the case that begins Tuesday, said in a ruling last April that "no reasonable jury could find that Musk's August 7 tweets of 2018 were accurate or not misleading" and denied a request by Musk and other defendants to have the case dismissed before trial.
Last week, Chen also ruled against a motion by Musk and other defendants to move the case to Texas, where Tesla is now headquartered, instead of San Francisco.
They had argued that the media attention on Musk and his purchase of Twitter made it impossible to find an impartial jury in the San Francisco Bay Area, particularly given the coverage of his layoffs on Twitter since he completed the acquisition of the platform, and their views on allowing tweets that may have previously been banned for spreading misinformation.
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"A potential juror who is already of the opinion that Mr. Musk uses Twitter inappropriately or is not honest on the app is unlikely to disentangle that bias from his evaluation of the evidence in this case and render an unbiased verdict." Musk's lawyers argued in the motion to move the trial.
Musk's lawyers said surveys of 200 prospective jurors found that 116 of them already had a negative opinion of Musk, and only 26 had a positive opinion of him.
"The jury questionnaires reinforce that the jury pool in this district is biased against Mr. Musk, that much of the bias relates directly to issues in this case (namely, Mr. Musk's use and honesty on Twitter), and that any starting points that previously existed have been prompted and emphasized by media coverage of recent events," his lawyers said in the filing.
"These numbers make it clear that it is not feasible to form an impartial jury from this pool of jurors."
This is just the latest court case involving Musk.
He is still awaiting a decision in a bench trial in a separate shareholder case in Delaware state court challenging the compensation package he received from Tesla that made him the richest person on the planet until recently. drop in the company's share price.
LawsuitElon MuskTesla
