Elon Musk, who has repeatedly come out of legal battles with shareholders successfully, has this time encountered serious resistance in San Francisco. A federal jury found the billionaire liable for misleading Twitter investors in 2022.
The case relates to a series of social media posts which, according to the court, artificially underestimated the value of the company’s shares at a key moment in the negotiations.
The court focused on two specific claims made by Musk during the period when he was attempting to renegotiate or withdraw from the $44 billion deal to purchase the platform. At the time, Musk claimed that the acquisition process was “temporarily on hold” due to concerns about the number of fake accounts, suggesting that the percentage of bots could be well above the company’s stated 5%.
Although Musk’s lawyers argued that his concerns were genuine, the jury found the statements to be a manipulation to lower the purchase price.
For the business world, this verdict is a signal that the line between a leader’s personal opinion and official market communication is becoming increasingly clear. Francis Bottini, representing the shareholders, stressed that the status of the world’s richest man does not absolve responsibility for the words that realistically shape stock market valuations.
Potential damages could be as high as $2.5 billion, which would be one of the highest fines in the history of market manipulation litigation involving private individuals.
Although Musk’s legal team has announced an appeal, calling the verdict merely a ‘bump in the road’, the case casts a shadow over his management style via social media. Musk has won similar lawsuits in the past – including the one over a famous tweet about ‘secured funding’ for Tesla’s privatisation.
However, the current loss could change the dynamics of his relationship with investors, especially in the context of the consolidation of his empire, including the recent incorporation of xAI into SpaceX’s structures, which has pushed the latter’s valuation to $1.25 trillion.
