Jury Finds Musk Accountable for Twitter Investors’ Stock Decline in 2022
A California jury has determined that Elon Musk is responsible for the significant drop in Twitter investors’ stock value when he attempted to acquire the social media platform for $44 billion in 2022. The jury sided with a group of investors who sued Musk, alleging that he publicly disparaged Twitter with the intent to depress its stock price and secure a more favorable purchase price.
The trial commenced earlier this month in federal court in California, centering on whether Musk intended to manipulate the market through his public statements. Over a six-month period in 2022, following his offer to buy Twitter, Musk frequently posted to his millions of followers claiming that the social network was plagued by bots that generated spam and fake accounts.
Musk ultimately completed the acquisition of Twitter at $54.20 per share, his original offer, amounting to approximately $44 billion. After the purchase, he rebranded the company as X.
The verdict represents a rare legal setback for Musk, who consistently denied any wrongdoing. Throughout the trial, his legal team argued that Musk’s comments reflected genuine concerns and that he had no intention of manipulating the stock price. Musk himself testified that he did not anticipate his criticisms would depress Twitter’s stock price or harm its investors.
“We are thrilled with the jury’s decision today,” said Mark Molumphy, lawyer for the Twitter investors.
“We believe that it is the largest securities jury verdict in United States history. The jury sent a strong message that no one is above the law.”
After three days of deliberation, the jury concluded that Musk’s statements did indeed cause Twitter’s stock price to fall on each trading day during the relevant period. The precise amount Musk will be ordered to pay the investors, potentially amounting to billions of dollars, has yet to be determined. Musk’s current net worth is estimated at $661 billion.
Of the four fraud claims presented in the lawsuit, the jury upheld two and rejected two. Additionally, the jury found that Musk did not engage in a “scheme to defraud Twitter investors.”
“The jury clearly took a nuanced view, which tells you these cases are incredibly fact-specific,” said Monte Mann, a lawyer at Armstrong Teasdale who has observed the case but is not involved in the litigation.
“Not every market-moving statement creates liability – but context, timing, and intent can tip the balance.”
In a written statement, Musk’s legal team described the verdict as “a bump in the road” and expressed their intention to seek vindication on appeal, referencing recent successful appeals Musk has won in other lawsuits.
The six-month period under scrutiny, roughly from April to October 2022, involved Musk initially signaling interest in the acquisition but then wavering while publicly criticizing the company. In May 2022, Musk tweeted that the buyout was “temporarily on hold,” which precipitated a sharp decline in Twitter’s share price.
Within 24 hours of that tweet, Twitter’s shares fell dramatically, at times dropping by as much as 20%. The stock remained volatile for several months thereafter. The investors involved in the lawsuit contend they sold their shares below the $54.20 offer price amid concerns that Musk’s acquisition was unraveling.
During the trial, Aaron Arnzen, attorney for the investors, argued that Musk was fully aware of the impact of his actions.
“He wanted a different deal,” Arnzen said.
“So he mounted a public spectacle to trash the company, to drive the stock price down, to renegotiate or escape the deal.”
Requests for comment from the investors’ legal representatives were not immediately returned.
