Jury finds Elon Musk liable for misleading Twitter investors
A California jury determined Musk deliberately drove down Twitter's stock price ahead of his $44 billion 2022 acquisition through misleading public statements.
11:05 PM
A jury in San Francisco federal court has found Elon Musk liable for misleading Twitter investors by deliberately driving down the social media company's stock price in the months leading up to his $44 billion acquisition in 2022. The nine-person jury returned a unanimous verdict on Friday after nearly four days of deliberation, concluding that Musk's public statements were intentionally misleading.
The civil class-action lawsuit, filed in October 2022 just before Musk completed his purchase of Twitter, centered on whether Musk intended to defraud shareholders who sold their shares based on his statements. The trial began on March 2 and focused on two tweets and comments Musk made on a podcast in May 2022.
During the six-month period following his April 2022 offer to buy Twitter, Musk posted repeatedly to his millions of followers that the social network was rife with bots that produced spam and created fake accounts. In one tweet, he stated that his purchase of Twitter was "temporarily on hold" pending confirmation that bots represented less than 5% of users. These public statements prompted some investors to sell their shares at lower prices before Musk ultimately completed the acquisition.
Musk eventually purchased Twitter for $54.20 per share, totaling approximately $44 billion—the same price as his original offer. He later renamed the company X and subsequently merged it with his artificial intelligence company xAI and SpaceX, his reusable rocket manufacturer.
The jury found Musk liable for misleading investors with two specific tweets but absolved him of broader fraud allegations, determining that he did not engage in a "scheme" to defraud shareholders. The jury also found that a statement Musk made on a podcast did not constitute misleading conduct.
During his testimony earlier this month, Musk argued that he did not mislead investors and that people simply read too much into his public comments and tweets. He acknowledged making what he called "stupid tweets" but maintained he did not believe his posts would affect markets. Musk's legal team has indicated they plan to file an appeal.
Attorneys for the plaintiffs said potential damages could reach as high as $2.6 billion, with the specific amount to be determined in coming weeks. Joseph Cotchett, an attorney representing the Twitter investors, characterized the case as protecting average investors including those with 401ks, pension funds, teachers, firefighters, and nurses.
This is not Musk's first legal encounter related to his social media posts, though he has previously prevailed in similar disputes.