Elon Musk Found Liable for Misleading Twitter Shareholders | X (formerly Twitter) Lawsuit
A federal jury in California concluded Friday that Elon Musk misled Twitter shareholders, contributing to a drop in the stock price as he pursued the $44 billion acquisition of the company. However, the jury acquitted him on some fraud allegations, finding he did not “orchestrate” a scheme to deceive investors. The verdict in the securities class action lawsuit means the world’s richest man could be ordered to pay billions of dollars in damages, as determined by the jury.
Minutes after the decision, lawyers for the entrepreneur informed Agence France-Presse that their client would appeal the ruling, which they characterized as a “setback.” Following a three-week trial in San Francisco federal court—which included Musk’s in-person testimony—the jury found that two tweets published in May 2022 by the Tesla and SpaceX chief executive contained false statements that caused Twitter’s share value to decline.
Musk acquired Twitter in October 2022 after months of negotiations with the social media company’s board of directors. He subsequently rebranded the platform as X. The lawsuit was brought by investor Giuseppe Pampena on behalf of individuals who sold Twitter shares between mid-May and early October 2022. The jury determined that Musk violated a securities rule prohibiting false or misleading statements that negatively affect a stock’s price, in this case, Twitter’s.
Jurors assessed damages ranging from $3 to $8 per share, per day, which attorneys for the plaintiffs said equates to approximately $2.1 billion in stock and another $500 million in options. Musk’s fortune is currently estimated at around $814 billion, largely tied to his holdings in Tesla, according to Forbes.
“This is a significant victory, not just for Twitter investors, but for the markets generally,” said Mark Molumphy, an attorney for the plaintiffs. “The verdict sends a clear message: no matter how rich or powerful you are, you must abide by the law.”
Musk, highly active on X, did not immediately react to the ruling. The verdict represents a rare legal defeat for Musk, often nicknamed “Teflon Elon” for his ability to emerge unscathed from litigation. His lawyers reminded AFP of that record, noting that on the same day, a Texas court exonerated him in a separate defamation case.
In 2023, another San Francisco jury swiftly acquitted him of similar accusations brought by Tesla shareholders, related to his 2018 tweets about potentially taking the company private. The civil suit in California alleged that Musk drove down Twitter’s stock price to renegotiate the purchase or withdraw from the deal, causing losses to investors who sold their shares.
During that period, Musk stated on X that the deal was “temporarily on hold” until Twitter demonstrated that the percentage of “bots”—fake accounts—was as low as the company claimed. Plaintiffs argued that these statements were part of a strategy to pressure the board into accepting a lower price than initially offered, at a time when Tesla shares were falling and Musk needed to sell more stock to finance the acquisition.
Monte Mann, a business litigation specialist who was not involved in the case, noted that the verdict sends a clear message: “If you move the market with your words, you have to own the consequences.” He added, “The law has always prohibited misleading statements. What’s new is the scale and the speed. When a single person can move billions with a tweet, the impact is multiplied, and juries are starting to capture it seriously.”
Musk abandoned his attempt to withdraw from the purchase in late 2022, after Twitter sued to compel him to complete the contract. Since then, he has integrated the social network with his artificial intelligence company xAI and his aerospace firm SpaceX. Forbes estimated Musk’s wealth at $839 billion earlier this month, based primarily on his stakes in companies like Tesla and SpaceX.