Elon Musk insists 420 is no joke for him.
As a witness during his ongoing securities fraud trial Monday, Musk argued that the $420 per share price he suggested in his infamous 2018 “funding secured” tweet wasn’t a weed hoax, it was actually just a fluke — with a dash of karma.
Musk was asked about the proposed stock price by Nicholas Porritt, an attorney for a class of Tesla investors who are suing the billionaire CEO over the loss of millions of dollars they say resulted from his botched attempt to take Tesla private. And it drew an eyebrow-raising reaction from Musk, which he took as a serious suggestion, though almost everyone else took it as an obvious reference to cannabis.
“You rounded up to 420 because you thought that was a joke your girlfriend would enjoy, didn’t you?” asked Porritt. “No,” Musk said, adding, “I think there’s some karma around 420. I should ask myself at this point if this is good or bad karma.”
Porritt sounded incredulous and asked again if the $420 was meant to be a joke. “420 wasn’t picked for a joke,” Musk said. “It was chosen because there was a 20 percent premium to the stock price.” He also argued that it was a “coincidence.”
Musk released the ill-fated tweet on Aug. 7, 2018, based on what he described as a “firm commitment” from the Saudi Arabian Public Investment Fund (PIF) to take Tesla private. At the time, the company was being “attacked” by “Wall Street sharks” and short sellers betting on his company’s failure, and Musk said he was just trying to protect its future.
But Porritt pointed out that there were no signed documents with the Saudis, no more than a handshake, and that Musk posted the tweet without consulting his own board and without considering how it might negatively impact Tesla shareholders .
“Before you tweeted ‘investor support is confirmed,’ you didn’t know if investor support was actually confirmed, did you?”
“Until you tweeted ‘investor support is confirmed,’ you didn’t know if investor support was actually confirmed, did you?” asked Porritt. He later explained, “By tweeting ‘investor support is confirmed’, you wanted to communicate that ‘Elon Musk support is confirmed’.”
The trial depends on whether the jury agrees that Musk may have to pay shareholders billions in damages for the money they lost from his tweets. Musk has already settled a $40 million settlement with the Securities and Exchange Commission over the tweets, although that settlement did not require him to admit wrongdoing. (Musk has since argued that he was forced into that settlement.)
Even before Musk took the stand, Judge Edward Chen ruled that the jury should find Musk’s 2018 tweets false. With that assumption, the jury must decide whether Musk deceived shareholders with his tweets and made them lose money.
In a soft, halting tone and at times complaining of “severe” back pain, Musk argued that he wasn’t relying solely on a pledge for the Saudi PIF as he tweeted “funding secured.” He argued that his shares in SpaceX would also help fund the deal to make Tesla private, noting that he had sold nearly $23 billion worth of Tesla stock to complete his acquisition of Twitter – a deal he tried unsuccessfully to get out of – as evidence of his willingness to use his various ventures to fund his business.
“Like the way I sold Tesla stock to buy Twitter…I didn’t want to sell Tesla stock, but I sold Tesla stock,” he said. “My SpaceX stock alone would have meant funding was secured.”
There was a brief burst of fireworks when Musk accused Porritt of failing to subpoena PIF officials to put the Saudis on record over talks with Musk. “The interesting question for you, sir, is why didn’t you subpoena him? Because if you did, it would destroy your case,” Musk said. Porritt said the plaintiff’s team sent court officials to Saudi Arabia, but Judge Chen quickly ended the brawl.
“My SpaceX stock alone would have meant funding was secured.”
A moment of hilarity came when Porritt accidentally referred to Musk as “Mister Tweet,” which Musk conceded was “appropriate.”
During his testimony, Musk likened the deal to buying a home with PIF as his mortgage lender. “No documents were signed, but they agreed to buy 5 percent of Tesla,” Musk said of the PIF.
“So you would expect less documentation for a multi-billion dollar private company transaction than for a home purchase?” Porritt replied. “Is that your certificate?”
Musk was also questioned by his own attorney, Alex Spiro, who tried to portray his client as a rowdy immigrant who had raised himself to become one of the most successful businessmen in the world. But much of that narrative could be lost on the jury, as Musk didn’t seem interested in answering questions about his childhood.
“Not good,” Musk replied when asked about his upbringing, declining to elaborate.
But when it came to grandiose statements about his own business acumen, Musk was unreserved. “I’ve done some things that were unprecedented,” he responded to a question from Spiro about characterizing his plan to take Tesla private as “unprecedented.”
“I think I’ve raised more money than anyone in history at this point,” Musk boasted, while arguing that he never lost his investors’ money. Plaintiffs may have different opinions.