SAN FRANCISCO — A jury found Elon Musk liable for misleading investors by deliberately driving down Twitter’s stock price in the months before his 2022 acquisition of the company for $44 billion, though jurors cleared him of some fraud allegations and concluded he did not “scheme” to defraud shareholders.
The civil trial in San Francisco centered on a class-action lawsuit filed shortly before Musk completed the purchase of Twitter, which he later renamed X. Jurors considered whether two tweets and comments Musk made on a May 2022 podcast amounted to intentional fraud that caused shareholders to sell their stock at depressed prices.
After nearly four days of deliberation following a three-week trial that began March 2, the nine-person jury found Musk liable for misleading investors with two tweets, including one on May 13, 2022, saying the Twitter deal was “temporarily on hold” while he sought information about fake accounts on the platform. The jury determined the podcast remark was an opinion and not a basis for liability, and it did not find that Musk engaged in a deliberate scheme to drive down the stock.
The jurors awarded shareholders damages between about $3 and $8 per share per day for the period in question, a figure plaintiffs’ lawyers estimate amounts to roughly $2.1 billion. Musk’s net worth is currently estimated at about $814 billion, much of it tied up in Tesla shares.
“It’s an important victory, not just for investors of Twitter, but for the public markets,” said Joseph Cotchett, an attorney for the plaintiffs. “I think the jury’s verdict sends a strong message that just because you’re a rich and powerful person, you still have to obey the law, and no man is above the law.” Musk’s lawyers declined to comment as they left the courtroom.
A central issue at trial was Musk’s repeated assertions that Twitter significantly understated the number of fake and spam accounts on its service. Musk testified that Twitter’s disclosure that roughly 5% of accounts were bots was false and that Twitter’s leadership withheld or misrepresented how those figures were calculated. He said those concerns motivated his attempt to withdraw from the deal.
Twitter sued in Delaware to force Musk to complete the acquisition, and just before that case was to go to trial, Musk reversed course and agreed to honor the original purchase price.
The trial included testimony from former Twitter executives, including CEO Parag Agrawal and CFO Ned Segal, and Musk testified for more than a day. He described the board’s explanations about bot counts as “BS” and said he believed Twitter lied about the metric. Musk also argued that completing the deal at the agreed price ultimately benefited most Twitter shareholders.
During the period when Musk sought to back out, Twitter’s shares fell below $33 — about 40% below Musk’s original purchase price — harming shareholders who sold amid the uncertainty, the plaintiffs said. The plaintiffs argued Musk’s public statements were strategic, intended to lower the price so he could renegotiate or exit the deal as Tesla’s stock declined and the acquisition became more costly.
Musk pushed back, saying he could not control whether people sold their stock and that shareholders who held their shares fared well. In closing, plaintiffs’ lawyer Mark Molumphy urged jurors to hold Musk accountable and compensate investors who lost money because of the tweets. “He knew what he was doing,” Molumphy said.
Musk’s legal team repeatedly moved for a mistrial during the contentious proceedings, arguing the billionaire could not receive a fair trial in San Francisco given public animosity toward him.
This is not the first time Musk has faced scrutiny over social media statements in court. In 2019 he testified for about eight hours in a federal trial over a 2018 tweet about taking Tesla private at $420 per share; a nine-member jury in that case absolved him of wrongdoing.
