A San Francisco jury ruled in favor of Tesla founder Elon Musk on Friday in a shareholder class action lawsuit over his 2018 “funding secured” tweet, in which the entrepreneur questionably claimed he had financing lined up to take over Tesla (NASDAQ: TSLA) private.
“Thank God, the wisdom of the people prevailed!” Musk chirped Friday after jurors in a federal civil trial ruled on his behalf. “I deeply appreciate the jury’s unanimous verdict of not guilty in the Tesla 420 take-private case.”
Class action lawyers representing Tesla ( TSLA ) shareholders are being sued for August 7, 2018, tweet in which Musk wrote: “Considering taking Tesla private for $420. Financing secured.”
The tweet sent TSLA up 11% to as high as $387.46 on the day, though the stock failed to reach $420 as the private equity takeover idea fizzled. It also emerged that while Musk was in talks with Saudi investors about financing the private deal, such financing was likely not truly “secured.”
TSLA’s stock ultimately sank as much as 35% intraday a month after Musk’s tweet, and the takeover deal never materialized.
Lawyers representing the shareholders argued that Musk had unfairly inflated TSLA’s stock price by exaggerating how tight the deal’s financing was. Had they prevailed, the court could have ordered Musk to pay billions of dollars in damages.
The U.S. Securities and Exchange Commission also previously sued Musk over the incident, reaching an out-of-court settlement in which he and Tesla ( TSLA ) each paid $20 million and Musk relinquished his chairmanship of the electric vehicle maker. Friday’s jury verdict came in an unrelated case brought on behalf of individual shareholders.
Musk testified in his own defense at a trial in San Francisco last month, saying the Saudi investors he spoke with “unequivocally” wanted to help privatize the company.
And while Telsa ( TSLA ) initially fell when the takeover deal fell apart, the stock later began a multi-year rally. In November 2021, TSLA peaked some 1,500% above its high since August 7, 2018, after stock splits were factored in.
Even with TSLA’s big pullback over the past year, the stock’s Friday close of $189.98 represents a gain of more than 635% from its intraday high on August 7, 2018 after accounting for stock splits.
Alpha seekers are divided on where Tesla ( TSLA ) will go next. Columnist Alpha Investment Research recently made a “Buy” case for the stock, while contributor Sean Chandler gave TSLA a “Sell” rating.