A San Francisco jury on Friday found Elon Musk liable for defrauding investors in Twitter, now known as X Corp., through tweets he made in 2022 regarding the number of fake accounts on the platform. The verdict came in a class action lawsuit brought by former Twitter shareholders who alleged Musk intentionally drove down the company’s stock price as he sought to renegotiate, or potentially abandon, his $44 billion acquisition deal.
Even as the jury sided with Musk on some of the allegations, they found that his statements about bot accounts were misleading. Jurors are determining the amount of damages Musk will owe, calculating a range of between $3 and $8 per share for the period in question, potentially totaling billions of dollars, according to the Associated Press.
The lawsuit centered on Musk’s tweets from May 2022. On May 13, he announced the deal was “temporarily on hold” pending verification of bot and spam accounts. Days later, he suggested that fake accounts could represent more than 20 percent of Twitter’s user base. Following the May 13 tweet, Twitter’s stock price experienced a significant decline.
During the trial, Musk testified that his tweets represented him “speaking his mind” and maintained that Twitter executives had misrepresented the prevalence of bot accounts. Former shareholders countered that they sold their shares at a loss due to Musk’s public uncertainty about the acquisition, according to KQED.
The acquisition itself, initiated on April 14, 2022, and completed on October 27, 2022, saw Musk acquire all outstanding shares of Twitter for $44 billion, transforming the company into X Corp. Musk had initially begun accumulating shares in January 2022, eventually becoming the largest shareholder with a 9.1 percent stake. Twitter initially invited him to join its board, an offer he later declined before launching his unsolicited takeover bid.
This shareholder lawsuit was one of several legal challenges Musk faced during and after the acquisition. Other cases included claims related to his delayed disclosure of his initial stake in the company, and a suit from former Twitter executives regarding unpaid severance. He also reached a settlement to avoid a trial over attempts to back out of the original $44 billion deal.
The jury’s decision does not resolve all legal issues stemming from the acquisition. The calculation of damages remains ongoing, and further legal challenges related to Musk’s actions surrounding the takeover are still possible.