What's at stake for Elon Musk's a lawsuit? It is 6 billion dollars of potential costs for Tesla which would basically mean they have to borrow lots of money and given that they just opened up a credit line for between five to seven billion dollars, which is supposed to be to help them facilitate the building of electric vehicle plants and Battery plants, it comes at an interesting time since while Elon Musk and Tesla are being sued for Elon Musk's taking Tesla private at 420 tweet from 2018., the potential damages could be as high as 6 billion dollars for Bloomberg. Now investors are claiming that Tesla stock was artificially inflated by about 66 dollars. During the period of time that Uh immediately after Elon Musk tweeted taking Tesla private at 420 and then right before Elon Musk ended up hosting a Blog on the Tesla website suggesting no, we are not going to end up taking Tesla private now Bloomberg suggests that there could be a potential for a settlement that is substantially lower than a six billion dollar deal. Usually a settlement would be worked out after Uh Tesla and Elon Musk in the event that they end up losing, end up losing Uh, So a settlement would be potentially the to the tune of 10 of the alleged damages.

anywhere between 500 million dollars to one billion dollars is the potential damage that Tesla would face Uh in the event of a settlement after a loss. Now you might ask yourself, why would anyone settle after they just won? Well, it's because Tesla is very likely to appeal Uh, the loss and the generally you can only appeal if your due process has been somehow violated. but Tesla has already basically set up all they need to be able to appeal because the judge in the case who's presiding this case has already told the jury that he believes Elon Musk's tweets were misleading now on a pellet Court may end up determining that the judge in this case calling Elon Musk's tweets misleading could end up being something that a jury should determine, not an individual judge that then gives Elon Musk and Tesla a potential to appeal. Losing this lawsuit for a lack of due process.

However, an appeal could take over a year to be heard, so that would be into early 2024 and an appellate court could end up ordering an entirely new trial. And that gives Tesla a lot of settlement leverage Because even if the people suing Tesla and Elon Musk now win. if it goes to an appeal and a new trial happens, they might not win again. And Bloomberg believes uh that this gives massive settlement leverage to Tesla and Elon Musk.

Remember these: these lawsuits were all filed in Uh in in about mid-2022 for this issue back in 2018. Uh, Bloomberg thinks there's about a 50 50 chance that a Tesla and Elon Musk win or lose. Interesting though, is the lead plaintiff this guy Glenn Littleton he's 70 who's 71 years old. Apparently he was trading like 10 million dollars worth of Tesla options in August of of 2018.

he had over 470 unique trade that trades that month and back in the 80s. He was fine for violating Wash sale rules and briefly had his Securities license suspended. But apparently what's fascinating in the case is that the lead plaintiff argues in court today that hey, I thought Elon Musk's tweets were definitive I Thought he was definitely gonna sell Tesla at 420 per share, but emails have actually now come out uh, through the court case and emails show that he didn't actually think the uh, uh, the the case was definitive or that Elon was definitely going to take Tesla private at 420 per share Zero Hedge provided those two emails and Glenn Littleton here writes I Got out of the obvious stuff because a lot of people thought it was a hoax and still had bids out there. I saw so many red flags with Elon and Tesla too much drama.

So in other words, while he thinks it's definitive that Tesla is going to be taken private, that's at least what he's alleging in court in emails. At the time he's saying eh, seems like drama seems like a hoax and then he says, over here there is so much risk in these options. As you can imagine, if this rumor of Elon taking Tesla private at 420 is correct, then the strike prices except calls below 420 become worthless. Correct.

This is basically if you have out of the money calls for let's say 500, but the Tesla the company goes private at 420, then those calls above 420 uh might either be worthless or or settle at a lower at a lower price or probably just honestly worthless. Uh, and so that's a risk. And so he's alleging that he lost money because he had to close certain positions. Forget about the option stuff for a moment.

The point is to say that here's a guy who's arguing in court I Definitely thought it was going to go private, but in emails he's like it sounds like a rumor and a hoax. On top of that, Apparently during the actual coverage period, he actually made 2.4 million dollars on options. So he actually made money. He didn't lose money on his option trades and now In Fairness, he did have to close some other positions uh, some of those longer term call options.

but by the time his longer term call options would have expired in January he would have end up ended up losing all of his premium on those because of not only Theta Decay but also because the call options would have not actually hit their strikes so we could put a potentially have lost more money. So a prior judge who's heard this case has actually said and declared that the lead plaintiff in the case against Elon Musk would have potentially lost more money. So if anything, Elon must helped the lead plaintiff a make money and B Lose less money. So I think it's going to be really hard for a jury to find that Elon Musk is somehow liable for this lead plaintiff losing money.

When the reality is, he actually made money. You're potentially lost less money than he otherwise would have, but the argument still exists that well, what if Elon was wrong to say that funding was secured? Well, Elon believes that funding was secured. In fact, not only did he believe that funding was secured because the private investment fund of Saudi Arabia Arabia was going to take Tesla private and had been wanting to take Tesla private for a while, but according to board meeting minutes, Goldman Sachs and Silver Lake assured Tesla's board of directors that funding was available from a variety of sources. All of this is coming out in the lawsuit.

Another thing that's coming out are actually text messages. Uh, which we because they're being submitted as court evidence here, we have to evaluate as likely being accurate text messages. but who know knows, you know people can fake text messages. But this seems like a reasonable discussion that had was had and it kind of shows the frustrating position that Elon Musk was in.

So apparently these are texts between Elon and Yasir who Elon Musk believed was the representative of Saudi Arabia's private investment fund that could have made the decision to help Elon Musk take Tesla private and so here you see uh, an article that Elon Musk sends to the individual saying Saudi Arabia's private investment fund has shown no interest in helping Tesla's buyout Elon says what the hell is going on here This is false Yasir replies this is not true, Nobody talked to them Okay, so it's really clear that something weird is going on here because the article is saying Saudi Investment fund has no interest in helping the Tesla buy out and now the individual is saying no, that article is not true which basically says so you are interested in helping Tesla do their buyout right Uh and then he writes good morning Elon want to check in with you and your team to see if you'd be able to start sending us information. We could have a kickoff team so that we could talk about the investment. Basically he's like hey, I gotta sell the idea of taking Tesla uh uh private to the other people involved in the private investment fund. Elon's like dude, I'm deeply offended.

This is ridiculous. You have to refute the false statement that you have no interest in Tesla because we've been talking about it. Well, apparently they did that and they made a comment talking about how they're in talks to invest in Tesla with a buyout deal and Elon says dude, this is a weak statement, It doesn't reflect the conversation we had at Tesla you said you were definitely interested in taking Tesla private and had wanted to do so since 2016. You also made it clear that you were the decision maker that you don't have to sell this idea to anyone else right now.

I'm sorry, but we can't work together. Elon's basically like middle finger. you're a you suck and the guy's like dude, it's up to you. He's like, come on man, you're throwing me under the bus here.

not cool and then he, uh, this private investment fund guy Yes, here goes. Look, it takes two to tango. We haven't received anything yet. They go back and forth a little bit.

I'm not going to read it all word for word, but basically a series like let's get on the phone and talk about it. Elon's like sorry, it's over. The guys like do, dude, come on like I don't want to throw you under the bus here, but we need some documents Elon replies and he's like dude, it's a publicly traded company, you have everything you need, you've already bought a five percent stake in Tesla But and then the guy's like, oh, but we want details like how do we take it private and Elon's like you're not an idiot. He didn't say those words but he's like dude, when we met blah blah blah, you guys know how to take a company private I'm just speeding this up because I'm not gonna read this all word for word.

You could pause the screen and read it yourself. But basically you're extremely experienced financially and are well aware that a Go Private transaction would require a 20 premium over the market price to buy out any shareholder that didn't want to sell. So anyway, uh uh, we haven't taken any company private yet in order for us to do that. I got to get some other people involved blah blah blah.

We haven't gone to the media, blah blah blah blah. And basically Elon is like dude, you suck. You told me you had the power to take the company private. You burned me.

We have Silvergate and Goldman that could help us take Tesla private Elon Wholeheartedly believes that the taking Tesla private tweet is factual. That's what he's arguing in court Bloomberg gives him a 50 50 chance of winning. Worst case scenario, it's a 50 billion dollar bill to Tesla although it's likely that's just going to end up getting settled down to 500 million to a billion dollars. Although given that the lead plaintiff kind of seems like a trading scumbag who is just upset he didn't get to make more money and he's kind of Being Greedy about this.

Given that he made money and probably lost less money than he otherwise would have, it seems to me that it would be very difficult for a jury to actually say that Elon Musk it deserves to be guilty and Tesla ultimately deserves to pay six billion dollars up to potentially six billion dollars in Damages I think Tesla and Elon are in the clear here and the case just continues to get more and more ridiculous as more information and data come out. Now with that said, I'm gonna hop on over to our course member live stream I Love you all but I Also love my course members and I promise them the opening bell and some Fundy analysis. So goodbye Godspeed Hopping over there now I Love you all, Goodbye.