Lawsuit Accusing Elon Musk of Tanking Twitter Share Price Goes to Jury

Whether Elon Musk will be forced to pay back investors who sold Twitter stock amid his 2022 takeover is now in the hands of a San Francisco jury, after attorneys wrapped up their closing arguments in the securities fraud case Tuesday.

The federal class action lawsuit, brought by former shareholders in the social media company, alleges that in the months before the $44 million buyout, the billionaire made misleading statements to hurt Twitter’s stock price with intent to renegotiate a cheaper deal.

“Mr. Musk decided … that he didn’t want to pay investors what he promised to pay. The deal in his mind had gotten too expensive,” said Mark Molumphy, an attorney for the plaintiffs. “So, he did here what he did on the stand: he trashed the company, he trashed the executives and he tanked the stock.”

The weekslong civil trial has focused primarily on statements Musk made in May 2022, speculating that the number of bots on Twitter was much higher than the company publicly reported, and suggesting that the deal could be put on pause as a result.

The previous month, he’d signed a binding agreement to purchase the company at $54.20 a share.

During his testimony earlier this month, Musk said that in a May meeting with then-CEO Parag Agrawal and CFO Ned Segal, he asked the executives how the company determined the number of spam accounts that use the site daily, and said he was “flabbergasted” when they did not know.

Days later, Musk tweeted that the deal was “temporarily on hold,” pending evidence of how the company calculated that percentage. Hours later, he posted that he was “still committed to the acquisition,” but the following Monday, he tweeted again, suggesting that up to 20% of Twitter users could be bots. In the time between those posts, the company’s stock dropped nearly 18%.

Molumphy said in total, Twitter stock dropped $8 million amid Musk’s public waffling, and many people sold their shares at deflated prices, believing the deal might fall through.

“There can be no dispute that Mr. Musk’s tweets caused this loss, caused this drop,” he said.

Musk’s defense argued his tweets were just him speaking his mind, and not intended to manipulate the market. Defense Attorney Michael Lifrak said Tuesday that Musk’s concerns about spam on the site were real, and said that when he asked for information about how Twitter calculated its bot numbers at the May executive meeting, the company “clammed up.”

Musk never asked directly for a discount on the purchase, Lifrak added.

The deal closed at the original price point in October 2022, after Twitter sued Musk over his alleged plan to back out.

Lifrak urged the jury to consider the facts of the case, regardless of their feelings toward Musk.

“This is about what happened in 2022, whether Mr. Musk engaged in the scheme to defraud, whether he purposely was tanking Twitter’s stock price, whether he lied,” Lifrak said. “He didn’t. They didn’t prove it.”

If he’s found guilty, Musk could be forced to repay more than $2 billion in damages to investors, according to Molumphy.