Elon Musk was ordered to pay over $2 billion for misleading Twitter investors prior to the 2022 acquisition.

Elon Musk deliberately suppressed the stock price during the key window before acquiring Twitter in 2022, and a San Francisco jury has ruled that he must pay damages.

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

The jury ruled that Tesla should pay shareholders approximately $3 to $8 per share daily in damages, with the final amount to be determined after shareholders submit claims. The plaintiffs’ lawyers estimate the total damages at around $2.1 billion. It has been reported that Musk plans to appeal the verdict.

In May 2022, Musk posted two tweets claiming the social network had too many fake accounts and attempted to back out of the deal. The tweets caused Twitter’s stock price to plummet, dropping below $33 during the period when the deal was uncertain, about 40% below Musk’s initial offer.

Case Focus: Two Tweets and Market Turmoil

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

However, over the following months, Musk’s stance quickly shifted, citing fake account issues as a reason to withdraw, ultimately attempting to unilaterally terminate the agreement.

Twitter then filed a lawsuit in Delaware court, demanding Musk fulfill his original commitments. Just before the trial, Musk reversed course again, agreeing to complete the deal at the original price.

The plaintiffs argue that Musk’s true motivation for wavering was the continuous decline in Tesla’s stock price, which meant he needed to sell more Tesla shares to finance the acquisition, leading him to seek to lower Twitter’s valuation or exit the deal altogether.

On May 13, 2022, Musk tweeted that the Twitter acquisition was “temporarily on hold,” citing the need for more information about the proportion of fake accounts on the platform.

Another tweet on May 17 responded to a report by Teslarati, emphasizing that fake accounts could be far higher than Twitter’s claimed “<5%” and stating that the deal could not proceed until proof was provided.

These tweets caused Twitter’s stock price to plummet, dropping below $33 during the period when the deal was uncertain, about 40% below Musk’s initial offer. The plaintiffs believe investors who were forced to sell their shares during this period suffered substantial losses.

Plaintiff lawyer Mark Molumphy stated in closing arguments that the tweets were not “careless mistakes” or “impulsive words,” but carefully calculated to depress Twitter’s stock price, aiming to renegotiate the acquisition terms or completely withdraw from the deal.

A committee of eight members calculated how Musk’s statements caused the company’s stock to decline over approximately five months on each trading day. The damages owed to individual investors could reach hundreds of millions or even billions of dollars, to be determined after shareholders submit claims.

Musk’s Defense: Bot Accounts and Misinformation

Musk’s main defense is that his statements stemmed from genuine concerns about the scale of bot accounts on Twitter, and do not constitute securities fraud or an intentional attempt to suppress the stock price.

It has been reported that Musk testified for over a day, insisting that Twitter’s management concealed information regarding the number of fake accounts, repeatedly using a vulgar term to describe the credibility of Twitter’s board’s disclosures.

When discussing Twitter’s claim that only about 5% of accounts are bots, Musk stated:

I clearly think that’s nonsense.

Musk also argued that completing the acquisition at the original price ultimately benefited the vast majority of Twitter shareholders. He said:

I can’t control whether others sell their shares, but those who held on have profited significantly.

During the controversial trial, Musk’s lawyers repeatedly filed motions for a mistrial, claiming that due to public hostility toward the billionaire Tesla CEO, he could not receive a fair trial in San Francisco.

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