A San Francisco jury has unanimously found Elon Musk liable for financial damages caused to shareholders of the former social media network Twitter, ordering him to pay damages potentially reaching up to $2.5 billion (over 58 billion Czech koruna), Reuters reports.
The case centers on public statements made by Musk in the spring of 2022, coinciding with his announcement of a $44 billion offer to acquire Twitter.
Musk publicly questioned the prevalence of bot accounts on the platform, stating he would not proceed with the acquisition unless the number of fake profiles was below 5%. The lawsuit alleged this was a tactic to drive down the stock price and either negotiate a lower purchase price or abandon the deal altogether.
Despite the initial conditions of the agreement not allowing for withdrawal, Twitter pursued legal action to compel Musk to complete the acquisition, BBC reported. He ultimately took ownership of the company in the fall of 2022 at the originally agreed-upon price, subsequently rebranding it as X in the following year.
Musk’s statements nonetheless had an immediate impact on the market. Twitter’s stock price declined in response to the uncertainty, falling as much as $8 per share, according to court experts. Many investors sold their holdings in 2022 at a loss, fearing Musk would terminate the agreement. These investors are now eligible for compensation.
Musk maintains his innocence, arguing he did not influence investors and that his public statements are often misinterpreted. “If this was a trial about whether I made dumb tweets, I would say I’m guilty,” he stated.
The jury’s decision arrives as Elon Musk continues to navigate challenges with X, formerly Twitter, and reflects the heightened scrutiny surrounding executive communications and their potential impact on market valuations. The substantial damages sought underscore the financial risks associated with public statements during major corporate transactions. The outcome of this case could set a precedent for future litigation involving similar circumstances, potentially influencing how companies and their leaders communicate with investors during acquisitions and other significant events.
