A civil jury in California 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 so many bots on Twitter that he later tried to back out of the acquisition. (Twitter eventually sued Musk to force him to make the deal.)
“We are temporarily putting Twitter transactions on hold until we have details supporting our calculation that spam/fake accounts actually make up less than 5% of our users,” Musk wrote on the platform.
Twitter’s stock price fell 8% just a few days after Musk posted this. Investor Giuseppe Pampena filed the lawsuit against Musk on behalf of other former Twitter investors who sold Twitter stock between May 13 (the day of the tweet), when the deal was finalized, and October 4.
Pampena’s lawsuit alleged that Musk intentionally posted his concerns on Twitter to create uncertainty about the stability of the platform, artificially driving down stock prices and causing losses for those who sold stocks during that period. Musk’s lawyers argued that he had legitimate concerns about the number of bots on the app. However, the jury gave more confidence to the plaintiff’s claims.
It’s not yet clear how much Musk will have to pay former Twitter shareholders, but Pampena’s lawyer said damages could amount to up to $2.6 billion, according to CNBC. This isn’t a huge blow to Musk, as Bloomberg estimates his net worth to be more than $660 billion.
This is not the first time Musk has been taken to court over a tweet. In 2018, he tweeted that he had secured funding to take Tesla private at $420 per share. This implies a plan to buy out public shareholders and delist the company from the stock exchange. The SEC claimed the posts were misleading and charged Musk with securities fraud. Musk was later forced to testify in court that he had not made a marijuana joke (420 is a widely known reference to cannabis) and claimed he sincerely believed he would take Tesla private at $420 per share. This was 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 secured” tweet, but this time he has to pay.
After acquiring Twitter, Musk rebranded the company as X and merged it with a new AI company, xAI. According to Musk, the combined company will be valued at $113 billion. Then, last month, SpaceX merged with xAI. Musk said the merger was driven by his desire to build a data center in space.
