It feels like we write this every few months, but here we go again: Elon Musk is heading to court.
What happened: A suit by Tesla shareholders against Musk, Tesla, and several Tesla directors kicked off yesterday with jury selection and opening statements.
Catch-up: The suit revolves around a tweet Musk made (because of course it does) in August 2018, where he claimed that he had secured funding to take Tesla private. That obviously didn’t happen, and claimants, who were Tesla shareholders at the time of the tweet, allege that Musk’s behaviour cost them billions of dollars.
- Musk has already paid out US$40 million in fines over the tweets and stepped down as Tesla’s chairman, though he is currently trying to renege on parts of that settlement.
- The jury will rule on whether Musk’s tweet affected investor sentiment and Tesla’s share prices, whether Musk acted knowingly, and whether to award damages.
Why it matters: The trial is yet another distraction for the electric automaker, which has hit a rough patch. How so? Let us count the ways.
- Tesla shares had their worst year ever in 2022, falling ~65% amidst disappointing delivery numbers and Musk’s Twitter drama. They’ve since rebounded somewhat but are still far from previous highs.
- Last week, the company slashed prices in the US, Europe, and China on its new models by up to 20% in a response to waning consumer demand.
- Plus, this isn’t the only Tesla shareholder-related case Musk is a party to. He’s still waiting for the verdict on a suit from a shareholder trying to void his pay package.
Bottom line: Tesla and Musk could really use a win right now. If the ruling doesn’t go their way, they’ll have to pay big and calls for Musk to step down as CEO could multiply.