A civil jury in California has determined that Elon Musk intentionally misled Twitter investors prior to his $44 billion acquisition of the platform in 2022. The jury ruled against Musk, finding that his social media posts caused some investors to suffer financial losses.
The lawsuit centers around statements Musk made regarding the number of bots on the platform. At the time, Musk used these concerns in an attempt to back out of the acquisition, which ultimately led Twitter to sue him to force the completion of the deal. The jury specifically cited two of Musk’s posts from May 13 and May 27, 2022, ruling them materially false or misleading.
In one prominent post, Musk stated, “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” Following that post, Twitter shares experienced an 8 percent decline. As a result, some investors sold their shares in the company at values below Musk’s initial $54.20 per share bid.
Investor Giuseppe Pampena filed the lawsuit on behalf of former Twitter shareholders who sold their stock between May 13, the date of the first cited post, and October 4, when the acquisition was finalized. Pampena’s lawsuit argued that Musk intentionally publicized his concerns to create uncertainty surrounding the platform’s stability.
The plaintiff claimed this was an effort to artificially drive down the stock price, causing financial harm to those who sold during that period. During the trial, Musk’s attorneys defended his actions by arguing that he was expressing legitimate concerns regarding the application’s bot population. However, the jury was more convinced by the arguments presented by the plaintiffs.
While the jury concluded that Musk intentionally misled investors, they also found that he did not engage in a specific overarching scheme to defraud shareholders. Testifying earlier in the month, Musk stated he did not believe his posts would negatively impact the markets. He did remark in court, however, that “If this was a trial about whether I made stupid tweets, I would say I’m guilty.”
The exact amount of money Musk will be required to pay the former shareholders has not yet been established. Attorneys representing the plaintiffs have stated that damages could reach as high as $2.6 billion. Musk’s legal team is expected to file an appeal. A multi-billion dollar penalty would represent only a fraction of his wealth, as his net worth is currently estimated at over $660 billion.
Musk has previously faced legal challenges regarding his social media activity. In 2018, the SEC charged him with securities fraud after he posted about securing funding to take Tesla private at $420 per share. He later testified that the price was not a cannabis joke and that he earnestly intended to buy out public shareholders at what was then a substantial premium. Although Musk won a subsequent shareholder lawsuit regarding the Tesla funding posts, he was not successful in this recent Twitter case.
Since finalizing the $44 billion purchase, Musk has rebranded Twitter as X and merged it with his artificial intelligence venture, xAI. According to Musk, this combined entity was valued at $113 billion.
Further corporate restructuring occurred last month when SpaceX merged with xAI. Musk indicated that this recent merger was driven by his ambition to construct data centers in space.