Elon Musk speaks near a Falcon 9 rocket during his announcement that Japanese billionaire Yusaku Maezawa will be the first private passenger who will fly around the Moon aboard the SpaceX BFR launch vehicle.
DAVID MCNEW | AFP | Getty Images
Elon Musk told a San Francisco federal court on Monday that he could have sold shares of SpaceX to take Tesla private in 2018. He was then, and still is, the CEO and largest shareholder of both companies.
Musk is being sued by Tesla shareholders for a series of tweets he wrote in August 2018 saying he had “funding secured” to take the automaker private for $420 per share, and that “investor support” for such a deal was “confirmed.” Trading in Tesla was halted after his tweets, and its share price remained volatile for weeks.
The shareholders in the certified class action lawsuit allege that Musk’s tweets were reckless and false, and relying on his statements to make investment decisions cost them significant amounts of money.
Musk would later claim that he had a verbal commitment from Saudi Arabia’s sovereign wealth fund, and was sure that funding would come through at his proposed price based on a handshake. However, the deal never materialized.
During his second day on the witness stand, Musk claimed that another reason he said he had “funding secured” for a deal back in 2018 was that he could have sold shares of SpaceX, a U.S. defense contractor and satellite internet company that he also runs, in order to finance the transaction.
Musk said under oath, “SpaceX stock alone meant ‘funding secured’ by itself. It’s not that I want to sell SpaceX stock but I could have, and if you look at the Twitter transaction — that is what I did. I sold Tesla stock to complete the Twitter transaction. And I would have done the same here.”
Musk did not say how many shares in his reusable rocket maker he would have been able to sell, to whom, and at what price in order to finance the Tesla buyout.
In April 2018, SpaceX said in a Securities and Exchange Commission filing that it had raised about $214 million as part of a financing round in which it was seeking more than $500 million in total equity funding.
An attorney for the shareholders, Nicholas L. Porritt of Levi & Korsinsky, asked Musk if the price he suggested for Tesla shares was a joke because 420 is a reference to cannabis in pop culture.
Musk insisted that this was coincidental. He said, “There is some, I think, karma around 420… I should question whether that is good or bad karma at this point.”
This is not the first legal action Musk has faced over his tweets. The SEC charged Musk and Tesla with civil securities fraud shortly after he sent them, and they paid separate $20 million fines to the federal agency to settle the charges. They later signed a revised consent decree that required Musk to relinquish his role as chairman of the board at Tesla temporarily, and to have a securities lawyer vet tweets that contain material business information about Tesla before he posts them.
Musk recently became the CEO of social media business Twitter after leading a $44 billion leveraged buyout of the company in October 2022. Saudi Prince Alwaleed bin Talal bin Abdulaziz is the social media company’s second-largest shareholder after Musk. Last November, Sen. Chris Murphy, D.-Conn, sent a letter to the Committee on Foreign Investment in the United States requesting a review of the financing for the Musk-Twitter deal.
Sam Bankman-Fried tried to influence witness through Signal, DOJ alleges
Former FTX chief executive Sam Bankman-Fried (C) arrives to enter a plea before US District Judge Lewis Kaplan in the Manhattan federal court, New York, January 3, 2023.
Ed Jones | AFP | Getty Images
Federal prosecutors are attempting to bar indicted FTX co-founder Sam Bankman-Fried from using encrypted messaging software, citing efforts that may “constitute witness tampering,” according to a letter filed in Manhattan federal court Friday.
Bankman-Fried reached out to the “current General Counsel of FTX US who may be a witness at trial,” prosecutors said. Ryne Miller, who was not identified by name in the government filing, is the current counsel for FTX US, and a former partner at Kirkland & Ellis.
The government claims that Bankman-Fried wrote to Miller via Signal, an encrypted messaging app, on Jan. 15, days after bankruptcy officials at crypto exchange disclosed the recovery of more than $5 billion in FTX assets.
“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,” Bankman-Fried allegedly told Miller.
Bankman-Fried has also been in contact with “other current and former FTX employees,” the filing said. Federal prosecutors allege that Bankman-Fried’s request suggests an effort to influence the witness’s testimony, and that Bankman-Fried’s effort to improve his relationship with Miller “may itself constitute witness tampering.”
Both Miller and a representative for Bankman-Fried declined to comment.
In restricting Bankman-Fried’s access to Signal and other encrypted messaging platforms, the government cites a need to “prevent obstruction of justice.” Federal prosecutors claim that Bankman-Fried directed Alameda and FTX through Slack and Signal, and ordered his employees set communications to “autodelete after 30 days or less.”
Citing previously undisclosed testimony from ex-Alameda CEO Caroline Ellison, the government claimed that Bankman-Fried indicated “many legal cases turn on documentation and it is more difficult to build a legal case if information is not written down or preserved.” Ellison pled guilty to multiple charges of fraud and has been cooperating with the U.S. Attorney’s efforts to build a case against Bankman-Fried.
Bankman-Fried pled not guilty to eight charges in connection with the collapse of his multibillion-dollar crypto empire, FTX. He is due in federal court in October, after being released on $250 million bond.
Amazon to start charging delivery fees on Fresh grocery orders under $150
Brendan McDermid | Reuters
Amazon will start charging delivery fees for Fresh grocery orders that are less than $150, in a move it said will help keep prices low on its services.
Beginning Feb. 28, Prime members who want home delivery from Amazon Fresh will incur a $9.95 delivery fee for orders under $50, while orders between $50 and $100 will include a $6.95 delivery fee, and orders between $100 and $150 will carry a $3.95 delivery fee, the company said in a note to customers viewed by CNBC. Only Prime members can use the delivery service, although anybody can shop at an Amazon Fresh grocery store.
Amazon previously guaranteed members of its $139-a-year Prime service free delivery on Fresh orders over $35.
“This service fee will help keep prices low in our online and physical grocery stores as we better cover grocery delivery costs and continue to enable offering a consistent, fast, and high-quality delivery experience,” the notice stated.
The move comes as Amazon CEO Andy Jassy has embarked on a wide-ranging review of the company’s expenses amid slowing sales and a worsening economic outlook. Amazon has eyed laying off 18,000 employees, frozen hiring in its corporate workforce, and paused or canceled some projects such as a sidewalk robot and a telehealth service.
Amazon has previously recalibrated its approach to online grocery deliveries, a business that is notoriously challenging from a cost and efficiency perspective. In 2021, Amazon added a $10 service fee for Whole Foods delivery orders to Prime members, after previously offering them for no extra charge.
Tesla just had its best week since May 2013
Tesla CEO Elon Musk smiles as he addresses guests at the Offshore Northern Seas 2022 (ONS) meeting in Stavanger, Norway on August 29, 2022.
Carina Johansen | AFP | Getty Images
Tesla shares surged 33% this week, marking their best weekly performance since May 2013 and second best on record.
The stock rose 11% on Friday to close at $177.88. The rebound followed a six-month period in which Tesla shares had declined more than 40%. The stock’s 65% plunge in 2022 was its worst in Tesla’s 12-plus years as a public company.
Tesla’s rally this week was aided by an upbeat fourth-quarter earnings report. During the call with shareholders and analysts, CEO Elon Musk said the company was on target to potentially produce 2 million vehicles in 2023, and he suggested demand would support sales of those cars as well.
Official guidance called for production of 1.8 million vehicles this year. The company has not revised its longstanding target for 50% compound annual growth rate over a multi-year horizon.
Tesla’s five day performance charted against Rivian and Ford Motor Company.
Tesla beat on both the top and the bottom lines, recording total revenue of $24.32 billion, including $324 million of deferred revenue related to Tesla’s driver assistance systems. The company cut prices for its cars dramatically in December and January, leading to concern about demand and a buildup of inventory.
Analyst reaction to Tesla’s numbers was mixed.
“For bulls, the growth story is alive and well,” Bernstein’s Toni Sacconaghi, who has an underperform rating on the stock, wrote in a note on Thursday. “For bears, the numbers don’t lie.”
In early January, Tesla reported fourth-quarter vehicle deliveries and production that fell shy of expectations.
Tesla’s stock jump came amid a broader market rally. The S&P 500 was up 2.2% for the week and the Nasdaq gained 4.3%.
Rival electric car manufacturer Lucid spiked on Friday as well, rising 43% on reports of rumors that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, intended to take the company private.
Some of Tesla’s underperformance last year was attributed to Musk’s shift of focus to Twitter, which he acquired for $44 billion in October. Under Musk’s leadership, Twitter has experienced mass layoffs and fleeing advertisers, gutting morale.
Tesla remains the second most-shorted stock in U.S. markets, behind only Apple, meaning that a large numbers of investors are betting on a decline. Over 94 million of the automaker’s shares are shorted, according to data from S3 Partners.
Despite the rally, active short selling continues, S3 managing director Ihor Dusaniwsky told CNBC. Short sellers view Tesla’s appreciation as having created “an overheated and overbought stock that is due for at least a short-term reversal,” he said. In the last week, S3 Partners said it’s seen a 3.9% increase in total shares shorted, while investors shorting the stock lost $4.3 billion over that stretch.
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