A federal jury in California has found Elon Musk liable in a class action securities lawsuit, determining that two tweets he posted in May 2022 contained false statements that caused a decline in Twitter’s share price. The verdict, announced Friday, could result in billions of dollars in damages against the tech billionaire, with plaintiffs’ attorneys estimating the figure at approximately $2.6 billion.
The lawsuit was filed on behalf of investors who sold Twitter stock between mid-May and early October 2022. It alleged Musk, then the prospective buyer of the social media platform, deliberately made misleading comments to depress the stock price. This was reportedly done to strengthen his position in negotiations over his $44 billion acquisition deal or to justify withdrawing from the agreement altogether. A key point of contention was Musk’s tweet questioning Twitter’s claims about the low percentage of fake “bot” accounts, which he said put the deal “on hold.”
Following a three-week trial in San Francisco that included Musk’s live testimony, jurors concluded he violated securities laws prohibiting false and misleading statements that artificially influence a stock’s value. The judgment marks a significant legal setback for Musk, who is often perceived as winning major litigation. His legal team immediately announced plans to appeal, calling the decision a “setback.” The appeal process is expected to be lengthy.
The case stems from the tumultuous period leading up to Musk’s forced completion of the Twitter acquisition in October 2022, after which he renamed the company X. Plaintiffs argued Musk’s strategy aimed to renegotiate the price downward amid a falling Tesla share price, which would have increased the cost of financing the deal for him. While this jury found against Musk on the shareholder claims, it is a civil matter, separate from the Delaware Chancery Court case that compelled him to close the purchase.
Musk’s legal team pointed to his recent clearance in a defamation trial in Texas as evidence of his continued success in court. However, the California verdict introduces substantial financial liability and underscores the legal risks for corporate leaders whose public communications on social media can directly impact market value. The outcome will likely be closely watched by regulators and investors regarding executive social media conduct.
