Home Business Elon Musk Tesla Tweet Trial Caused Billion Dollar Damage to Investors

Elon Musk Tesla Tweet Trial Caused Billion Dollar Damage to Investors

Elon Musk Tesla Tweet

According to the estimates shown at Tuesday’s trial of Elon Musk’s 2018 tweet declaring he had secured funding to take Tesla private at $420, the investors caused billions of dollars in damages after the deal collapsed. 

What is the Complete Story?

Two experts, economist Michael Hartzman and University finance professor of Maryland, Steven Heston, hired by attorneys representing Tesla shareholders presented mind-bending estimates at Tuesday’s Elon Musk Tesla tweet trial. On 7 August 2018, Musk abruptly posted a tweet declaring funding secured to take Tesla private just before boarding his private. 

He also announced the Saudi Arabia Prince’s wealth fund helped him to do the job. Prince funded about $2 billion and bought a 5% stake in the company to diversify its interest beyond oil. Firstly, there was some confusion about whether Musk was joking. 

But after some time, Musk tweeted again to clarify that taking Tesla private was no joke. He also testified that he could raise money by selling some of his stocks in SpaceX. On Friday, US District Judge Edward Chen expected to turn the trial over to the jury. 

However, due to Musk unpredictable journey on Twitter, he could be facing more financial fallouts. After his troublesome 2018 Tesla tweet, he and his electric motor company reached a $40 million settlement with securities regulators. 

On behalf of Tesla shareholders, the jurors first have to determine whether Musk’s two tweets could steer Tesla investors in the wrong direction. The jury is trying to calculate how much he and Tesla have to pay for the misleading tweets. 

Two Experts Analysing Elon Musk Tesla Tweet Trial

Economist Michael Hartzman, reviewed the tweet case with terms of consequential inflation and but-for to determine the damages Tesla’s investors are suffering during 2018 from $4 billion to $11 billion. 

On the other hand, Steven, analysed the impact of Musk’s tweets deeper and drew mainly upon a formula known as the Black-Scholes model used by companies to value compensation packages. 

While having some words with Musk’s lawyer about the reliability of his model, finance professor at University of Maryland acknowledged that all models deviated from reality, which is why they are known as models. 

However, the second expert, Steven, was paid $300,000 to $350,000 for his efforts in Musk’s Tesla tweet trial. He was trying to present concrete estimates on the Tesla investors facing billion-dollar damages. 

What’s Next?

Tesla founder and CEO Elon Musk, has made up his mind that the electric motor company should remain publicly traded. Musk’s decision has paid him a lot, including his investors also. 

Nowadays, the electric motor company’s shares are worth more than eight times after adjusting for two stock splits that have occurred since then.

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