Tesla says suit over Musk's take-private tweet misses the mark

SAN FRANCISCO -- Elon Musk’s comments about taking Tesla private were “aspirational,” not fraudulent, the company argues in asking a U.S. judge to throw out a shareholder lawsuit over his infamous tweet from 1 1/2 years ago.

Investors claim the Twitter post on Aug. 7, 2018 -- “Am considering taking Tesla private at $420. Funding secured” -- was an intentional deception that jolted the electric car maker’s stock price, causing billions of dollars in losses.

But Tesla contends the disgruntled shareholders are conveniently ignoring that the CEO told his board just days earlier he wanted to take the company private. Musk repeated that desire in an email to employees after the tweet.

“Statements describing the possible structure Mr. Musk ‘envisioned,’ ‘hoped for,’ ‘intended’ and ‘would like’ were plainly aspirational,” Tesla argues in a court filing. “There is no dispute that this was Mr. Musk’s true aim.”

A hearing on whether the suit should proceed is set for Friday in San Francisco federal court.

Tesla shares surged as much as 13 percent after the tweet, and trading was temporarily halted. But as questions swirled about Musk’s statements in the following hours and days, the stock bounced the other way. The plaintiffs are a mix of long and short sellers. The latter group have been a frequent target of Musk’s ire.

The U.S. Securities and Exchange Commission was quick to open an investigation, questioning Musk, Tesla’s board and other executives. Musk and Tesla agreed to pay $40 million to resolve the probe without admitting or denying wrongdoing. The regulator also imposed an unusual condition that forbids the billionaire CEO from tweeting about Tesla’s financial condition without advance approval from a company lawyer.

One point of contention in the shareholder case is Musk’s email to employees that the company posted on its blog less than three hours after the tweet.

Tesla says that message demonstrates Musk’s “long-standing interest” in taking the company private.

But the suing investors claim -- just like the SEC -- that Tesla’s chief financial officer and other officers came up with the idea of “expounding on Musk’s initial tweet” in the blog.

“Tesla and Musk worked hand-in-hand in publishing and republishing the false and misleading information,” the investors allege.

The case is In re Tesla Inc. Securities Litigation, 18-cv-04865, U.S. District Court, Northern District of California (San Francisco).