Billionaire Elon Musk is responsible for stock price drops caused by statements he made in the lead-up to his purchase of social media company Twitter – now X – a jury has found.
Musk committed to buy Twitter for $44 billion in 2022, a deal he was eventually compelled to follow through with by a Delaware court. In April of that year, he said he intended to place the deal on hold until executives at the company could prove that “spam/fake accounts do indeed represent less than 5 per cent of users.”
In the wake of this announcement, Twitter shares shed over 30 per cent of their value, dropping from a deal price of $54.20 a share to the low $30s.
Although Musk eventually completed the purchase at $54.20 per share, the lawsuit alleged that investors had sold their stakes at a lower price prior to closing the deal, due to fears of it collapsing.
Lawyers for the investors claimed Musk was advised to attempt to drive down the purchase price of the company by threatening to back out after having signed a binding agreement.
The jury found Musk liable on two of the four fraud counts brought, rejecting claims that he had engaged in a “scheme to defraud Twitter investors” and that he had made false statements about Twitter’s bot problem with the intention of driving down its stock price to secure a lower purchase price. It did, however, find him responsible for intentionally moving the market with his public statements. The damages, which are yet to be determined, could run into the billions of dollars.
Musk’s legal team described the verdict as a “bump in the road” and said they intend to appeal.
