In a significant ruling, a federal jury in San Francisco found that Elon Musk’s statements regarding the number of fake accounts on Twitter misled investors during his $44 billion acquisition of the platform in 2022. The jury’s decision comes as part of a larger class action lawsuit initiated by former Twitter shareholders, who argued that Musk’s tweets effectively defrauded them, impacting the value of their investments.
The jurors determined that Musk’s social media activity, particularly a tweet from May 13, 2022, which announced that the Twitter deal was “temporarily on hold” due to concerns about fake accounts and bots, played a crucial role in causing the decline of Twitter’s stock price. In this case, they calculated that affected shareholders should receive damages estimated between $3 and $8 per share for each day the misleading statements were in effect.
While the exact amount Musk might owe as a result of this ruling remains uncertain, reports suggest that the liability could reach into the billions of dollars. The lawsuit contended that Musk’s tweets were not merely personal opinions but rather strategic moves aimed at lowering Twitter’s stock price, thereby providing him leverage to either renegotiate the terms of the acquisition or ultimately withdraw from the deal altogether.
Throughout the trial, Musk defended his tweets, asserting they were expressions of his thoughts and reflecting on his belief that Twitter executives had misrepresented the number of bots on the platform. However, former shareholders noted that Musk’s public uncertainty over the acquisition impacted their decisions to sell shares at significantly lower prices.
This trial is one of several legal challenges Musk faced following his takeover of Twitter, including lawsuits concerning his delayed disclosure of his stake in the company. Additionally, Musk dealt with claims from former executives regarding unpaid severance, which he eventually settled. He also narrowly avoided a trial linked to his repeated attempts to back out of the deal entirely.
As the legal proceedings unfold, this ruling could have lasting implications not only for Elon Musk and his business dealings but also for shareholders who claim they were negatively impacted by his actions during the tumultuous acquisition process.
