Elon Musk appeared in a San Francisco courtroom on Wednesday, facing accusations that he intentionally drove down Twitter's stock price through false and misleading statements before his $44 billion acquisition of the social media platform in 2022. The lawsuit, filed in October 2022, represents Twitter shareholders who sold their stock between May 13 and October 4, 2022. ' The billionaire Tesla CEO initially agreed to buy Twitter and take it private in April 2022.
On May 13, 2022, Musk declared his plan 'temporarily on hold,' citing the need to verify the number of spam and fake accounts on the platform. This announcement caused Twitter's stock to tumble. Days later, Musk tweeted that the deal 'cannot go forward,' claiming nearly 20% of Twitter accounts were 'fake,' according to the lawsuit.
'' The legal filing contends that Twitter had not agreed to a pause, and the merger agreement contained no provision allowing Musk to unilaterally halt the deal. Despite his explanation, Twitter's stock fell nearly 10% on May 13. During questioning, plaintiff's lawyer Aaron P.
Arnzen pressed Musk on his tweets – or lack thereof – concerning his decision to acquire Twitter and his prior purchases of the company's stock. Musk testified that he did not consider it 'material' when he began accumulating Twitter stock in early 2022, and therefore did not tweet about it or disclose it to the Securities and Exchange Commission (SEC). Musk stated he had bought stock in 'many companies' without publicizing it.
Once his stake became public, Twitter's stock surged by 27% in a single day. 'That sounds high,' Musk commented. The details of Musk's stock accumulation in early 2022, including timing and quantities, and why he did not disclose it to the SEC remain unclear.
Arnzen extensively questioned Musk about the tweet, asking if he believed it would have a 'material impact' on Twitter's stock. Musk maintained that he had explicitly stated his commitment to the deal at the time, likening the 'temporarily on hold' statement to 'saying you’re going to be late for a meeting. ' In the subsequent weeks, Musk continued efforts to delay or withdraw from the deal, which the lawsuit claims he did through false and disparaging statements about Twitter's business, causing a sharp decline in the San Francisco company's stock.
In July 2022, Musk intensified his focus on the bots issue, announcing he would abandon his offer to buy Twitter, alleging the company failed to provide information about spam accounts. The exact financial impact on shareholders who sold between May 13 and October 4, 2022, as claimed in the lawsuit has not been disclosed. The current status of the lawsuit and potential legal outcomes or penalties for Musk are still pending.