Elon Musk took the stand Wednesday in a San Francisco courtroom, facing allegations that he deliberately depressed Twitter’s stock price with false statements before acquiring the platform for $44 billion in 2022. The civil lawsuit, brought by shareholders who sold stock between May and October 2022, claims Musk violated securities laws by intentionally manipulating the market.
The Core Dispute: The case centers on Musk’s tweets and public statements regarding his decision to buy—then seemingly abandon—the Twitter deal. The plaintiffs argue his actions were “carefully calculated” to drive down the stock price. Musk maintains he was simply expressing his concerns about the platform’s spam and bot activity.
In April 2022, Musk initially agreed to purchase Twitter. However, on May 13th, he announced the deal was “temporarily on hold,” citing the need to verify the number of bot accounts. This triggered a stock drop. Days later, he tweeted the deal “cannot go forward,” claiming 20% of accounts were fake. The lawsuit argues that Musk’s statements were deceptive because Twitter had not agreed to pause the deal, and the merger agreement lacked a clause allowing unilateral suspension.
During questioning, Musk admitted he didn’t consider his early stock purchases “material,” meaning he did not disclose them to regulators or tweet about them. He justified this by saying he buys stock in many companies without publicity. Once his stake became public, Twitter’s stock surged, a detail Musk acknowledged with a shrug: “That sounds high.”
Musk’s Defense: The tech billionaire defended his actions, framing his statements as honest assessments rather than market manipulation. He likened the “temporarily on hold” tweet to simply saying you’ll be late for a meeting—not canceling it altogether. Yet, the stock plummeted nearly 10% that day. When pressed on whether he considered the tweet’s impact, Musk repeatedly stated, “I was simply speaking my mind.”
The lawsuit alleges that Musk continued to make “false and misleading statements” to renegotiate the price or abandon the deal entirely. He eventually announced his intention to back out in July 2022, citing Twitter’s alleged failure to provide accurate bot data. The lawsuit notes Musk had waived due diligence, forfeiting his right to examine the company’s finances.
Musk claimed Twitter misrepresented the number of bots, stating, “They lied.” However, the company had disclosed its bot estimates for years, even acknowledging they might be inaccurate. In 2021, Twitter had already settled claims of overstating user growth for $809.5 million.
The Resolution and Aftermath: After Twitter sued to force the sale, Musk ultimately offered to proceed with the original $44 billion bid in October 2022. The deal closed later that month. Following the acquisition, Musk slashed the workforce, dismantled trust and safety teams, and relaxed content moderation policies. In July 2023, he rebranded Twitter as X.
This is not Musk’s first legal battle over market-affecting statements. Three years ago, he defended himself in court against accusations of misleading investors about Tesla’s potential acquisition price. That case ended with a jury finding him not liable.
The current trial will determine whether Musk’s actions constitute illegal stock manipulation, a charge that could result in significant financial penalties. The case underscores the growing scrutiny of billionaire CEOs and their influence on public markets via social media.
