Jury: Musk’s Tweets Caused Investor Losses
▼ Summary
– A California jury found Elon Musk misled Twitter investors with his 2022 tweets before agreeing to buy the company for $44 billion.
– The jury specifically cited two of Musk’s May 2022 tweets as materially false or misleading, causing investors to sell shares below his offer price.
– Musk’s attorneys are expected to appeal the verdict, as potential damages in the class action lawsuit could reach $2.6 billion.
– Musk had testified that he did not believe his posts would affect markets, though he acknowledged making “stupid tweets.”
– Musk initially tried to back out of the deal in July 2022, accusing Twitter of fraud, but ultimately completed the purchase at the original price in October.
A California jury has ruled that statements made by Elon Musk on social media misled investors in Twitter, now known as X, prior to his acquisition of the company. The verdict centers on two specific tweets from May 2022 that the jury found to be materially false or misleading, directly causing financial losses for shareholders who sold their stock at deflated prices. This decision underscores the significant legal and financial consequences that can arise from executive communications on public platforms.
The case focused on posts Musk made as he was attempting to renegotiate or withdraw from his $44 billion agreement to purchase the social media platform. In one tweet, he declared the deal was “temporarily on hold” pending verification of the platform’s spam account metrics. In another, he suggested the number of fake accounts could be “much higher” than reported, casting doubt on the validity of Twitter’s official filings. The jury determined these public statements were key factors that drove down Twitter’s share price, harming investors who sold before the deal ultimately closed at the original offer of $54.20 per share.
During the trial, Musk testified that he did not believe his posts would unsettle the markets, though he conceded in a now-famous quote that making “stupid tweets” was an activity for which he would plead guilty. His legal team argued there was no deliberate scheme to defraud shareholders. Despite this, the jury’s finding of liability on the specific claims related to the tweets opens the door to substantial financial penalties.
Plaintiffs’ attorneys estimate potential damages could reach as high as $2.6 billion. Musk’s lawyers have indicated they plan to appeal the verdict, setting the stage for further legal proceedings. This lawsuit was filed by investors as a class action shortly after Musk finally completed the acquisition in October 2022, following months of contentious litigation where he had accused Twitter’s leadership of fraud.
The outcome highlights the evolving scrutiny of corporate communications, particularly when disseminated through informal channels like social media. For executives and investors alike, it serves as a stark reminder that public statements, even those framed as personal opinions or questions, can carry serious legal weight and directly impact market behavior.
(Source: The Verge)
