Musk must pay over $2 billion for misleading Twitter investors before the 2022 acquisition.

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Musk was found by a San Francisco jury to have intentionally depressed Twitter’s stock price during a critical window before his 2022 acquisition, and must bear liability for damages.

On Friday, March 20, a jury at the U.S. Federal Court in San Francisco ruled that Musk defamed Twitter in 2022 and attempted to acquire the social media platform at a price lower than his original $44 billion offer, constituting fraud against Twitter investors.

The jury decided that Tesla must pay shareholders compensation of about $3 to $8 per share per day, with the final amount to be determined after shareholders file claims. Plaintiff’s attorney stated the total compensation could reach about $2.1 billion. It was later reported that Musk will appeal the verdict.

In May 2022, Musk posted two tweets claiming the social network had too many fake accounts and attempted to exit the deal. The tweets caused Twitter’s stock price to plunge, and during the uncertain period, the stock fell below $33—about 40% lower than Musk’s initial offer.

Case Focus: Two Tweets and Market Turmoil

In April 2022, Musk announced he would acquire Twitter for $54.20 per share, totaling $44 billion.

However, over the following months, Musk’s stance abruptly changed. Citing the issue of fake accounts, he repeatedly expressed intentions to back out, and ultimately attempted to unilaterally terminate the agreement.

Twitter promptly filed a lawsuit in Delaware, demanding that Musk fulfill his original commitment. Right before the trial, Musk reconsidered and agreed to complete the transaction at the original price.

Plaintiffs argued that Musk’s wavering was really driven by the continued decline in Tesla’s stock price, meaning he would have to sell more Tesla shares to finance the acquisition, so he sought to depress Twitter’s valuation or withdraw from the deal.

On May 13, 2022, Musk tweeted that the Twitter acquisition deal was "temporarily on hold," citing the need for further information on the proportion of fake accounts on the platform.

Another tweet, posted on May 17, replied to a Teslarati article, emphasizing that the number of fake accounts might be much higher than Twitter claimed ("<5%"), and stating that the deal could not proceed until proof was provided.

The above tweets led Twitter’s stock price to crash, and during the entire period of deal uncertainty, the stock dropped below $33—about 40% lower than Musk’s original offer. Plaintiffs argue that investors who were forced to sell shares during this period suffered significant losses.

Plaintiff’s attorney Mark Molumphy stated in his closing argument that the tweets were not “innocent mistakes” or “impulsive words,” but calculated and intended to drive down Twitter’s stock price so Musk could renegotiate the acquisition terms or withdraw altogether.

The eight-member committee calculated the effect of Musk’s statements on the company’s stock price on each trading day over about five months. The compensation Musk must pay individual investors could reach hundreds of millions—or even billions—of dollars, to be determined after shareholders file claims.

Musk’s Defense: Bot Accounts and Misinformation

Musk’s core defense argument is that his statements were driven by real concerns about the scale of bot accounts on Twitter, not securities fraud or an intentional scheme to depress the stock price.

Reports say Musk testified for over a day, insisting that Twitter’s management hid information about the number of fake accounts, repeatedly using a crude expression to describe the reliability of the board’s information.

When Twitter claimed only about 5% of its accounts were bots, Musk stated:

I made it clear—I think that’s bullshit.

Musk also argued that by ultimately completing the acquisition at the original price, he actually gave most Twitter shareholders a substantial return. He stated:

I can’t control whether people sell stock, but those who held on greatly benefited.

Throughout the contentious trial, Musk’s lawyers repeatedly filed motions to declare the trial invalid, claiming that public hostility toward the Tesla CEO made it impossible for him to get a fair trial in San Francisco.

Risk DisclaimerThe market involves risk; invest cautiously. This article does not constitute personal investment advice and has not considered the unique investment objectives, financial situation, or needs of individual users. Users should determine whether any opinions, viewpoints, or conclusions in this article suit their own circumstances. Investing based on this article is at your own risk. ```