Tesla boss Elon Musk has lost a legal tussle in California after a jury said he defrauded Twitter shareholders during the messy run-up to his $44 billion takeover of the company. The verdict came on Friday and handed a win to investors who said his public comments hurt them while the deal was still playing out.
Lawyers for the plaintiffs said the damages could reach $2.6 billion, a huge number in a case tied to one of the most chaotic tech acquisitions in recent years. The lawsuit is called Pampena v. Musk. It was filed in October 2022, after Elon finished buying Twitter for $54.20 per share. After closing the deal, he changed Twitter’s name to X. He later combined it with xAI, his artificial intelligence company, and then with SpaceX, his rocket business.
Elon Musk loses lawsuit over comments during Twitter takeover
Outside the courthouse in San Francisco, lawyer Joseph Cotchett said, “This is a great example of what you cannot do to the average investor — people that have 401ks, kids, pension funds, teachers, firemen, nurses. That’s what this case was all about. This was not about Musk. It was about the whole operation.” The fight centered on what Elon said after he made his bid for Twitter in April 2022.
Soon after offering to buy the company, he started questioning Twitter’s numbers on bots, spam, and fake accounts. In May 2022, Elon posted that the takeover was “temporarily on hold” until Twitter’s chief executive could show that fake and spam accounts were close to the roughly 5% level listed in the company’s SEC filings. That post, along with other public remarks from Elon, hit Twitter shares hard. The stock fell almost 10% in a single trading session.
Jurors spent four days reviewing the evidence. They then unanimously found that Elon’s tweets from May 13 and May 17 were materially false or misleading. Former Twitter shareholders said those posts were not random. The group included small investors and options traders who argued that Elon was trying to pressure Twitter’s board into accepting a lower price than the one he had already agreed to pay.
They said he had a financial reason to do that because Tesla stock had dropped, and that meant he may have needed to sell more Tesla shares than he first expected in order to fund the buyout. The plaintiffs said they sold their Twitter shares for less than $54.20 after reading Elon’s posts and hearing his comments in press interviews. Their lawyers said the damages estimate came from expert work on how much his changing public stance pushed the stock price down during the class period.
Elon’s lawyers at Quinn Emanuel pushed back in an emailed statement. They said, “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 investor verdict landed in the same week that another lawsuit hit one of Elon’s companies.
Three teenagers in Tennessee sued xAI in California, where the company is based. The high school students said xAI’s image tools were used to turn real photos of them into sexually explicit fake images. They reportedly want to proceed under pseudonyms. They are also asking for class-action status so they can represent what the complaint describes as thousands of victims who are minors, or who were minors, when those fake images were made.
