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Elon Musk faces day two of questioning in SolarCity trial

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Elon Musk faces day two in court over Tesla’s acquisition of SolarCity. Yahoo Finance’s Akiko Fujita and Brian Cheung discuss.

Video Transcript


AKIKO FUJITA: Welcome back to "Yahoo Finance Live." In our hot takes today, Elon Musk back in court testifying for a second straight day in that acquisition of SolarCity. Brian, a tangent here regarding reports the court had to take a recess after somebody threw up in the courtroom.

But there's a lot at stake here for Elon Musk. Of course, this is stemming from that acquisition, Tesla's acquisition of SolarCity. The key question this morning, whether in fact Elon Musk set the price for Tesla to acquire SolarCity. He spent about six hours on the stand yesterday. And the company has a lot to lose here. $2 billion, potentially, could be the payout if he loses the lawsuit.

BRIAN CHEUNG: Yeah. Six hours on the stand, I guess, no surprise that someone threw up, although Bloomberg is reporting that we don't think it was Musk or the lawyer questioning him or the judge. Again, that's what they're reporting. But this is a very interesting kind of situation where a lot of the media reports are probably just going to be about the buzzy things just because it's Musk, right?

There were some headlines coming out of the court hearing yesterday that noted Musk said something along the lines of, I don't even like being the CEO of this company. He said, I rather hate it. There was a lot of buzzy headlines about whether or not that questions his, I guess, passion for being the manager of one of the highest flying growth companies in the world.

But I think that we need to talk about the merits of the case itself. As you mentioned, these shareholders not particularly happy with the way that Tesla went about the SolarCity acquisition. They argue that maybe it was a bailout then Musk had engineered.

But we have to keep in mind that the lawsuit was against Musk and the board members. The board members settled. It was Musk's decision to take this to court, which I think underscores his, I guess, kind of hard-headedness if you will, about the ability to try to fight off these types of lawsuits. He tends to take a lot of these things personally.

So this could cost Musk up to $2 billion if he loses the suit. So he does have a lot to lose here. But I think he does underscore his ability and confidence in maybe winning this trial. But we'll have to see how all those proceedings in Delaware go.

AKIKO FUJITA: Yeah. I mean, all eyes on Elon Musk, especially if he's taking another six hours on the stand today. But to your point, Brian, this does raise the larger question that I think has always been tied to Tesla, which is, is Elon Musk inherently a risk. And maybe that's not a fair question to talk about with just one legal case. But as you've said, we've covered it extensively, you've got Elon Musk at the head of the company. And there are a lot of headlines that come out of it.

In the case of SolarCity, to your point, the specific question here was whether, in fact he did this essentially to benefit himself, given the interest that he had in both Tesla as well as SolarCity and whether, in fact, it was a bailout. But I'm not sure that we're sort of-- I wonder if we're sort of past the point of Elon Musk, his words, his commentary sort of being tied to the stock moves and whether, in fact, this is sort of-- I don't know-- indicative of where Tesla is heading because we have seen Tesla down. But it has been down not necessarily because of Elon Musk's comments but because of where the numbers have come in for the company.

BRIAN CHEUNG: Well, Elon's defense on his side of things was that his shares in SolarCity were about equal of his shares in Tesla, which means that once the acquisition was done, he didn't have any sort of personal gain. But of course, the argument from the shareholders is not necessarily just the stake ownership that he had but rather the timing of everything, whether or not he had engineered all of this to try to essentially give himself a boost.

Now, whether or not that's true-- again, you have to remember, the board members did settle. So there could be some merits behind all that. But I do think that, in general, it seems like this is a case that could be on both sides. We need to see what happens.

But I the bigger story overall is beyond SolarCity. What if Elon Musk faces future lawsuits down the line and wants to take it every single time to court personally? I think that would be very much something that you could argue is not the best use of his time, especially when you're the head of a major company. But again, something we will need to watch for in the future.