A California civil jury on Friday ruled that Elon Musk intentionally misled Twitter investors when he tried to back out of his $44 billion acquisition of the platform in 2022.
At the time, Musk tweeted that there were too many bots on Twitter, which was why he later tried to fight back against the acquisition. (Twitter ultimately filed suit to force Musk to sign the deal.)
“Twitter transactions are temporarily on hold pending further details supporting calculations that spam/fake accounts actually account for less than 5% of users,” Musk wrote on the platform, which has since been renamed X.
In the days after Musk posted this, Twitter stock fell 8%. Investor Giuseppe Pampena filed the lawsuit against Musk on behalf of other former Twitter investors who sold their Twitter shares between May 13 (the date of the tweet) and October 4, when the transaction was completed.
Mr. Pampena’s lawsuit alleges that Mr. Musk intentionally posted his concerns on Twitter in order to create uncertainty about the stability of the platform, artificially depressing the stock price and causing losses to those who sold their shares during the period. Musk’s lawyers argued that he had legitimate concerns about the number of bots on the app. However, the jury was convinced by the plaintiff’s argument.
It’s not yet clear how much Musk will have to pay former Twitter shareholders, but Pampena’s lawyer said damages could reach up to $2.6 billion, according to CNBC. This isn’t a huge blow to Musk, as Bloomberg estimates his net worth at more than $660 billion.
This is not the first time Musk has been sued over tweets. In 2018, he tweeted that he had secured funding to take Tesla private at $420 per share. This means a plan to buy out ordinary shareholders and delist the company from the stock exchange. The SEC claimed the posts were misleading and charged Musk with securities fraud. Musk later testified in court that he was not making a marijuana joke (420 is a widely known term for cannabis) and that he truly believed he would take Tesla private for $420 per share, a significant premium to Tesla’s stock price at the time.
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Musk won a similar lawsuit brought by shareholders over his “funding” tweet, but now he must pay compensation.
After acquiring Twitter, Musk rebranded the company as X and later merged it with his new AI company, xAI. Musk said the combined company would be valued at $113 billion. And last month, SpaceX merged with xAI. Musk said the merger was motivated by a desire to build data centers in space.
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