- Elon Musk’s “funding secured” tweet cost Tesla investors $12 billion in just 10 days, a jury was told per Bloomberg.
- Michael Hartzmark of Forensic Economics said investors who took both long and short positions were burned.
- Musk is being sued after indicating in 2018 that he had funding in place to take Tesla private at $420 a share.
The “funding secured” tweet at the center of a lawsuit against Elon Musk cost Tesla investors $12 million in the space of 10 days, a jury was reportedly told.
Michael Hartzmark of Forensic Economics told a jury in a market manipulation trial against the Tesla CEO that his 2018 tweet, where he said he was considering taking the company private, did “consequential harm” to investors, per Bloomberg.
Musk is being sued by a group of investors who said his tweet caused huge losses for those holding both long and short positions on the stock, with his comments forcing wild fluctuations in its price. The $12 billion loss figure is attributed to all investors, rather than only those suing Musk, and not indicative of the damages being sought by plaintiffs.
After Musk’s tweet on August 7, which read “Am considering taking Tesla private at $420. Funding secured,” Tesla’s share price jumped 10%. It continued to rise, but fell back as the veracity of the tweet was interrogated and an investigation was opened by the SEC.
It was reported that around the time that Tesla short sellers lost out on $3 billion as a result of the tweet. Those who took long positions were also burned when his claim came to nothing.
“Uncertainty is the kryptonite of investors,” Bloomberg reported Hartzmark as saying. “As this went drip, drip, drip over time it would have a negative impact” on the share price.
The Twitter owner has said he was confident his tweet about having funding secured was accurate based on conversations he had had with Yasir Al-Rumayyan, the governor of Saudi Arabia’s Private Investment Fund, who he said had “verbally” expressed support for the plan.
Hartzmark argued the information Musk conveyed in his tweet was “material” to potential investors, as demonstrated by emails to the company’s investor relations office at the time of the post, per Bloomberg.
But the publication added Hartzmark was forced by Musk’s lawyer Andrew Rossman to accept that the first part of Musk’s tweet, that he was considering taking the company private, was accurate.
Tesla didn’t immediately respond to Insider’s request for comment.