Elon Musk misled Twitter investors while trying to get out of acquisition, jury says

On Friday, a civil jury in California determined that Elon Musk deliberately misled Twitter investors when he attempted to withdraw from his $44 billion acquisition of the platform in 2022.

At that time, Musk had tweeted that the presence of too many bots on Twitter was his reason for reconsidering the acquisition. Consequently, Twitter sued Musk to compel him to complete the deal.

Musk tweeted, “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” on the platform, which he later renamed X.

Following Musk’s tweet, Twitter shares fell by 8%. Investor Giuseppe Pampena filed a lawsuit against Musk on behalf of other Twitter investors who sold their shares between May 13, the date of the tweet, and October 4, when the deal was finalized.

Pampena’s lawsuit claimed that Musk intentionally raised concerns about Twitter to create uncertainty about its stability, thereby artificially reducing its stock price, which led to losses for those who sold their shares during that period. Musk’s lawyers maintained that he was genuinely concerned about the bot issue on the platform. However, the jury found Pampena’s argument more convincing.

While it remains uncertain how much Musk will have to compensate the former Twitter shareholders, Pampena’s attorney indicated that damages could amount to as much as $2.6 billion, according to CNBC. This potential payout is not considered a major financial setback for Musk, whose net worth is estimated by Bloomberg to exceed $660 billion.

This is not Musk’s first legal encounter due to his tweets. In 2018, he tweeted about securing funding to take Tesla private at $420 per share, intending to buy out public shareholders and remove the company from stock exchanges. The SEC accused him of securities fraud, claiming the tweets were misleading. Musk later testified that he was not making a cannabis-related joke and genuinely believed he would privatize Tesla at that price, a significant premium over its stock price at the time.

Musk had previously won a similar lawsuit related to the “funding secured” tweet, but in this case, he is required to pay.

After acquiring Twitter, Musk rebranded it as X and later merged it with his new AI company, xAI. Musk stated that the combined company was valued at $113 billion. Recently, SpaceX merged with xAI, a move Musk explained was driven by his ambition to establish data centers in space.