A California civil jury concluded on Friday that Elon Musk intentionally deceived Twitter investors in his attempt to withdraw from a $44 billion acquisition of the platform in 2022. Musk’s claims about Twitter being rife with bots led him to assert that numerous fake accounts prompted his decision to reconsider the deal. Subsequently, Twitter took legal action to compel Musk to complete the acquisition.
Musk publicly stated the deal was “temporarily on hold” due to the need for clarification on whether spam or fake accounts constituted less than 5% of active users, a claim he made via a tweet on May 13, 2022. Following this announcement, Twitter’s stock price plummeted by 8%. Investor Giuseppe Pampena lodged a lawsuit against Musk on behalf of other former shareholders who sold their Twitter shares between his tweet and the finalisation of the acquisition on October 4.
Pampena’s lawsuit argued Musk’s public concerns were aimed at creating instability around Twitter’s financials, thereby artificially lowering its stock price and resulting in financial losses for those who sold their shares during that crucial period. Musk’s legal team contended that his statements were legitimate expressions of concern over the platform’s user integrity, but the jury sided with Pampena’s argument.
While the specific amount Musk may be required to pay to the affected shareholders is yet to be determined, Pampena’s legal representative indicated that damages could amount to as much as $2.6 billion. Despite this potential financial liability, Musk’s estimated net worth remains over $660 billion, minimising the overall impact of the ruling.
This isn’t the first time Musk has faced legal scrutiny for his tweets. In 2018, he controversially claimed to have secured funding for Tesla’s privatisation at $420 per share, which led to allegations of securities fraud by the SEC. Musk contended that his remark was not a joke and he genuinely believed in the feasibility of the deal. Ultimately, he was exonerated in that instance.
Following the acquisition of Twitter, Musk rebranded the platform as X and integrated it with his AI venture, xAI, claiming the combined entity holds a valuation of $113 billion. Recently, it was reported that SpaceX has merged with xAI, a move Musk attributed to a vision of establishing data centres in space.
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