Elon Musk’s next drama: The trial over his tweets about Tesla

Musk’s leadership of Twitter — where he has gutted the staff and alienated users and advertisers — has proven unpopular among Tesla’s current stockholders, who are worried he has been devoting less time steering the automaker at a time of intensifying competition. Those concerns contributed to a 65 per cent percent decline in Tesla’s stock last year that wiped out more than $US700 billion in shareholder wealth — far more than the $US14 billion swing in fortune that occurred between the company’s high and low stock prices during the August 7-17, 2018 period covered in the class-action lawsuit.

The lawsuit is based on the premise that Tesla’s shares wouldn’t have traded at such a wide range if Musk hadn’t dangled the prospect of buying the company for $US420 per share. Tesla’s stock has split twice since then, making that $US420 price worth $US28 on adjusted basis now. The shares closed last week at $US122.40, down from its November 2021 split-adjusted peak of $US414.50.

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After Musk dropped the idea of a Tesla buyout, the company overcame a production problem, resulting in a rapid upturn in car sales that caused its stock to soar and minted Musk as the world’s richest person until he bought Twitter. Musk dropped from the top spot on the wealth list after the stock market’s backlash to his handling of Twitter.

The trial is likely to provide insights into Musk’s management style, given the witness list includes some of Tesla’s current and former top executives and board members, including luminaries such as Larry Ellison, Oracle co-founder, as well as James Murdoch, the son of media mogul Rupert Murdoch. The drama also may shed light on Musk’s relationship with his brother, Kimbal, who is also on the list of potential witnesses who may be called during a trial scheduled to continue through February 1.