A verdict has been secured. It’s one that should make Elon Musk—and Tesla investors—smile.
A California jury on Friday found the
CEO not liable for damages from the fallout associated with Musk’s August 2018 “funding secured” tweet about taking the electric vehicle maker private at $420 per share. After stock splits, the $420 price would have worked out to $52.50 per share.
Plaintiffs were seeking billions in damages, alleging trading losses that wouldn’t have happened if there was no “funding secured” tweet.
“The Jury took less than two hours to decide that the plaintiff’s case was entirely unjustified,”
Future Fund Active ETF
(FFND) cofounder and portfolio manager Gary Black tells Barron’s.
“A tweet that says considering taking
private and funding secured effectively means nothing. Any shareholders that traded on that tweet were dopes,” Black, whose fund holds Tesla stock, adds.
For Tesla investors, the end of the trial removes a small overhang: If Musk had been found liable, the company might have had to pay a settlement. However, it’s unlikely such a situation would have caused a drastic stock swing.
Still, a loss for Musk might have prompted him to sell his own Tesla shares, says Wedbush analyst Dan Ives . Since investors don’t like when Musk sells Tesla stock, the jury’s ruling marks a “clear positive” for Tesla,” he says.
Shares were up about 1.5% in afterhours trading Friday. That adds almost $10 billion to Tesla’s near-$600 billion market capitalization. Investors can probably think of the gains as the trial’s maximum impact on the stock.
Musk has paid for the tweet in other ways: He and Tesla paid a combined $40 million in fines as part of a settlement with the Securities and Exchange Commission.
Tesla stock closed up 0.9% on Friday after the IRS changed the maximum price Tesla, and other auto makers, could charge for certain vehicles and still qualify for the new $7,500 purchase tax credit. The
dropped 1% and 1.6%, respectively.
Write to Al Root at firstname.lastname@example.org