The Verdict
A San Francisco jury found Elon Musk liable for misleading investors by deliberately driving down Twitter's stock price before his $44 billion acquisition of the social media company. The jurors determined that two tweets posted in May 2022 contained false statements.
Tweets in Question
The jury focused on two specific tweets from Musk. One tweet stated that the Twitter deal was "temporarily on hold." Jurors concluded these tweets misled investors, though they did absolve Musk of "scheming" to mislead investors.
Damages Awarded
The jury awarded shareholders between $3 and $8 per share per day in damages. Plaintiffs' lawyers estimate the total damages to be between $2.5 and $2.6 billion. The lawsuit covers investors who sold Twitter shares between May 13 and October 4, 2022. Joseph Cotchett, an attorney for the plaintiffs, called the verdict "an important victory, not just for investors of Twitter, but for the public markets."
Musk's Defense
Musk testified that Twitter had a much higher number of fake and spam accounts than the 5% it disclosed in regulatory filings. He argued that Twitter's leadership lied about the number of bots on the platform and withheld information from him about how the number of fake accounts was calculated. Musk stated he made it clear that he thought it was "BS," referring to Twitter's calculations asserting that only about 5% of its accounts were bots.
The Trial
Former Twitter executives, including CEO Parag Agrawal and CFO Ned Segal, testified during the trial. Investor Brian Belgrave stated he sold thousands of Twitter shares in July 2022, believing that Musk was no longer going to buy the platform because of his public posts and comments. Belgrave said his sale price was less than what he'd purchased the shares for and significantly less than the $54.20 per share Musk eventually paid. "I got screwed," Belgrave said. "I got cheated."
Musk's Response
Musk's lawyers said they will appeal the decision, calling it "a bump in the road." Musk did not immediately react to the verdict.
Not the First Lawsuit
This is not the first time Musk has been involved in lawsuits regarding his social media posts. In 2023, a jury in the same San Francisco federal court cleared him of similar charges brought by Tesla shareholders, following his 2018 tweets claiming he had the funding to take the automaker private.
A Separate Legal Victory
Separately, the Texas Court of Appeals ruled in Musk's favor in a defamation lawsuit, Musk v. Brody, concerning a post that allegedly misidentified Brody as one of the unmasked individuals at a protest. The court held that Musk was not liable.
The verdict against Musk highlights the potential financial consequences of his social media activity, particularly given that Al Jazeera reported Forbes magazine earlier this month estimated his net worth at $839 billion.
