Unveiling the Truth: How Elon Musk’s $44 Billion Twitter Acquisition Misled Investors

A jury in California has determined that Elon Musk is responsible for misleading investors regarding his plans to purchase Twitter, a move that led to a significant decline in the social media company’s stock value. The verdict comes as part of a class-action lawsuit filed in federal court in 2022, just prior to Musk’s final acquisition of Twitter for $44 billion.

The lawsuit, brought against the billionaire entrepreneur, claims that investors were misled into selling their shares following a tweet by Musk. On May 13, 2022, Musk announced that his Twitter acquisition was “temporarily on hold,” causing market ripples.

Musk’s hesitation stemmed from concerns over the prevalence of spam and fake accounts on the platform, which he suspected were more numerous than Twitter had publicly acknowledged. According to Musk, approximately five percent of accounts may have been bots.

The plaintiffs in the case argued that Musk’s statements were strategically made to depress Twitter’s stock price, allowing him to renegotiate the purchase at a more favorable rate. Their contention was that these actions constituted a deliberate attempt to manipulate the market to his advantage.

The plaintiffs argued that Musk made these statements to intentionally drive down the value of the shares so he could negotiate a lower purchase price. 

On May 16, 2022, Musk publicly suggested that the deal price could change, saying during a Miami tech conference that it wouldn’t be ‘out of the question’ to buy Twitter for less than the $44 billion that had already been agreed upon. 

After nearly four days of deliberation, a nine-person jury in San Francisco found that Musk misled investors with his tweet saying the deal was ‘temporarily on hold’.

At the same time, jurors did not agree with the plaintiffs that Musk orchestrated a deliberate fraud scheme.

Elon Musk (pictured entering federal court on March 4) was found liable by a California jury for misleading investors during the chaotic six-month period in 2022 when he acquired Twitter for $44 billion. The plaintiffs said Musk intentionally drove down the stock price with various public statements in order to negotiate a lower purchase price

Jurors said this tweet from Musk misled investors by saying the deal was ‘temporarily on hold’. Total damages could swell to $2.5 billion, depending on how many investors sign on to the class action. Musk plans to appeal the verdict

The jury awarded damages that are expected to total around $2.5 billion, which will depend entirely on how many people file to be part of the class action, according to attorneys for the plaintiffs.

Musk is worth about $814 billion, with most of wealth tied up in shares of Tesla.

‘It’s an important victory, not just for investors of Twitter, but for the public markets,’ said Mark Molumphy, an attorney for the plaintiffs. ‘I think the jury’s verdict sends a strong message that just because you’re a rich and powerful person, you still have to obey the law, and no man is above the law.’

Musk’s lawyers plan to appeal the case, citing separate unrelated cases in Texas and Delaware where Musk won appeals.

‘We view today’s verdict, where the jury found both for and against the plaintiffs and found no fraud scheme, as a bump in the road. And we look forward to vindication on appeal,’ the legal team at Quinn Emanuel Urquhart & Sullivan said in a statement.

The Daily Mail approached Musk’s lawyers for comment. 

The nearly three-week trial in San Francisco federal court for the Northern District of California began on March 2 and featured testimony from former Twitter CEO Parag Agrawal and former CFO Ned Segal.

Musk also testified for more than day, during which he maintained that Twitter’s leadership lied about the number of bots there were.

He also claimed that his decision to follow through on the deal in October 2022 provided a huge windfall for investors who held onto their shares.

The nearly three-week trial in San Francisco federal court for the Northern District of California began on March 2 and featured testimony from former Twitter executives who were integral in the deal, including former CEO Parag Agrawal

Musk also testified and maintained that Twitter executives lied about the number of bots on the platform, which he believed should have given him the right to walk away from the deal

‘I can’t control whether people sell their stock, but everyone who held the stock fared extremely well,’ he said on the stand.

The plaintiffs argued that Musk engineered the chaotic six months it took for the deal to eventually go through.

It began in April 2022, when he signed a binding merger agreement to buy the company at a valuation of roughly $54.20 per share.

In July 2022, Musk officially sought to end the deal, prompting Twitter to sue him for breach of contract. On July 11, the stock sank to $32.65, roughly 40 percent lower than the offer price.

The trial for that case was set to kick off in October 2022, but Musk confirmed in his own testimony that his lawyers advised him ‘there was no choice’ but to buy Twitter at the original price.

So, on October 27, 2022, the deal closed, just before the court-ordered deadline. Musk has since overhauled Twitter, renaming it X, laying off thousands of employees and merging the company with his AI startup xAI.

Musk said he still believes the inflated user numbers on Twitter should have given him grounds to walk away from the deal. He also acknowledged that his tweet about the number of bots wasn’t his ‘wisest’.

‘I am not sure I would call it incredibly stupid, but if it led to this trial, it probably qualifies as such,’ he said.