Elon Musk Testifies That His Tweets Did Not Drive Tesla’s Stock Price

Elon Musk testified on Friday that he was aware that he posted important information on his Twitter account about Tesla, the electric car company he runs. But he denied that his social media posts were responsible for swings in Tesla’s share price.

“Just because I tweet something, doesn’t mean people believe it or act accordingly,” Mr. Musk said in federal court in San Francisco, adding, “The causal relationship is clearly not there simply because of a tweet.”

Mr. Musk made those remarks in response to questions from a lawyer representing investors who say they lost money on Tesla’s stock after Mr. Musk discussed a proposal to take the company private in 2018. The investors are seeking billions in damages from both Mr. Musk and Tesla.

In 2018, Mr. Musk wrote on Twitter: “Am considering taking Tesla private at $420. Funding secured.” He then wrote: “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.” Tesla’s stock price jumped after he published those posts but fell as the deal did not advance.

The senior district judge overseeing the case, Edward M. Chen, has already ruled that Mr. Musk’s tweet about “funding secured” and his second statement on Twitter were untrue. But the jury still has to decide whether those statements led investors to lose money.

Mr. Musk, wearing a dark suit and a black surgical mask, arrived in a courtroom filled with lawyers, reporters and people who are interested in the case and in Mr. Musk. A group that appeared to be part of Mr. Musk’s security detail spoke in whispers to court officers and stood at the room’s doors before Mr. Musk walked in.

Mr. Musk acknowledged that his posts on Twitter were subject to rules from the Securities and Exchange Commission but said he couldn’t be as comprehensive on Twitter as Tesla could be in S.E.C. filings or press statements.

“One cannot ignore the character limitation, and everyone on Twitter is aware of the character limitation,” he said, referring to the character limit of tweets.

Mr. Musk testified for about 30 minutes on Friday afternoon and is expected to return to answer more questions on Monday. He nodded to jurors as he left the courtroom.

In opening statements on Wednesday, the investors’ lawyers argued that Mr. Musk had known that Tesla was nowhere near going private and lied in how he described the proposal. Investors made decisions because they believed Mr. Musk’s posts were true, they said.

“For the stock market to work properly and fairly, you need accurate and reliable information,” said Nicholas Porritt, a lawyer for the investors. Otherwise, he added, “people won’t be able to invest and save for their future, for their retirement.”

But lawyers for Mr. Musk and Tesla have argued that the chief executive did not lie when he said he was thinking about taking Tesla private and that people invested in the company because of that consideration. The plan to take Tesla private collapsed not because Mr. Musk hadn’t secured the funding, but because he didn’t have approval by shareholders.

“The core of what he’s saying is indisputably true,” said Alex Spiro, a lead lawyer on Mr. Musk and Tesla’s legal team, referring to the phrase “am considering.” “It wasn’t reckless to assume he could get funding. It was reckless to use the wrong choice of words.”

Mr. Spiro also said Mr. Musk made a “split-second decision” to post on Twitter about taking Tesla private because he was reacting to reports that Saudi Arabia’s Public Investment Fund had bought Tesla shares. Mr. Musk meant to convey that “funding wasn’t an obstacle,” Mr. Spiro added, not that funding had been secured. Mr. Musk and Tesla’s legal team tried to compel Saudi officials to testify but gave up that effort last week.

In 2018, Mr. Musk and Tesla settled a separate lawsuit with the S.E.C. about his plan to take Tesla private. They paid fines to the S.E.C., and Mr. Musk agreed to resign as chairman of the automaker and to allow a lawyer to review certain statements about the company before Mr. Musk can post the information on social media.

In his testimony, Mr. Musk said he thought Twitter was “the best way to communicate with people,” including “investors, big and small.” He also said he used Twitter to share memes, a comment that drew laughter from some people watching the trial.

Mr. Musk also acknowledged that in July 2018 his associates and friends, including a Tesla director at the time, Antonio Gracias, suggested that he take a break from Twitter. That summer was full of “extreme pains,” Mr. Musk said, because Tesla was struggling to increase production of its most affordable car, the Model 3. Before Mr. Musk talked about taking Tesla private on Twitter, he made a baseless claim that a British diver involved in a cave rescue in Thailand was a “pedo guy.”

When asked whether he heeded their advice, Mr. Musk answered: “I suppose I continued to tweet.”

His posts were closely followed and analyzed by investors and others interested in the company and electric cars.

On the witness stand, Glen Littleton, one of the investors and a plaintiff in the case, said on Wednesday that Mr. Musk’s first statement on Twitter about taking the company private seemed definitive. As a result, Mr. Littleton said he began trading options.

“It was going to pretty much wipe me out,” said Mr. Littleton, 71, referring to Tesla going private. “I wanted to ensure my livelihood. This represented a threat to my livelihood.”

Timothy Fries, another investor and plaintiff in the case, testified on Friday that Mr. Musk’s first statement on Twitter appeared to present a good opportunity to invest in Tesla. He bought shares in the company the next day.

“I wasn’t ready to purchase shares until I saw the tweet,” Mr. Fries said. He thought that the deal was still being negotiated but that Mr. Musk’s post meant “there was a committed party and those funds had been vetted.”

The trial started less than three months after Mr. Musk acquired Twitter and fired most of that company’s employees. He has also alienated many people by changing the social media platform’s content rules, reinstating some users whose accounts had been suspended in the past, including former President Donald J. Trump.

Mr. Musk’s team tried to have the case moved to Austin, Texas, where Tesla is based, arguing that he couldn’t get a fair trial in San Francisco because of local news coverage of his Twitter takeover. Judge Chen denied that request.

During jury selection on Tuesday, some prospective jurors described Mr. Musk as “not necessarily likable,” “another arrogant rich guy” and a person who wrote occasionally “ill-informed” social media posts. None of those jurors were selected.

Instead, the case will be decided by a jury of two women and seven men — one of whom said his thoughts about Mr. Musk and Tesla were “nothing” in his juror questionnaire, and one of whom called Mr. Musk a “fast-rising businessman.” The trial is expected to last around three weeks.

Peter Eavis contributed reporting.