A jury found that Tesla CEO Elon Musk is liable to investors for intentionally driving down the stock price during his acquisition of Twitter (now X).
According to the Associated Press and Bloomberg News, on the 20th (local time) a jury in the U.S. District Court for the Northern District of California found in a civil lawsuit between Musk and Twitter investors that Musk's remarks misled investors. The posts in which Musk claimed that spam and fake accounts were rampant on Twitter induced a decline in the share price, causing losses to investors.
The jury determined that Musk should pay damages of $3 to $8 per share. The plaintiffs estimated total damages at about $2.5 billion (about 3.6 trillion won).
However, the jury did not find that Musk manipulated the stock price as part of a scheme. It returned not guilty opinions on some fraud allegations. Musk's side said, "This verdict is only a minor procedural hurdle," and noted it would prove innocence on appeal.
The lawsuit stems from Musk's 2022 acquisition of Twitter. In April of that year, Musk agreed to buy Twitter for $54.20 per share, totaling $44 billion, but later posted that the "transaction is on hold pending verification of the basis for the estimate that the proportion of fake accounts is under 5%." After the remark, investors were rattled and the stock plunged into the $30 range.
Musk recently testified in court that Twitter underreported the rate of fake accounts to the U.S. Securities and Exchange Commission (SEC). He said, "The actual rate was much higher," adding, "The company provided false information."
Meanwhile, after Musk announced he was putting the acquisition on hold, Twitter's board filed a lawsuit in July of the same year seeking to compel performance of the contract. Twitter countered that it had provided sufficient information and that Musk sought to terminate the contract due to worsening market conditions. As trial approached, Musk reversed course, and in Oct. 2022 he completed the acquisition under the original terms.