Elon Musk arrives at federal court on March 4, 2026 in San Francisco, California.
Josh Edelson | Getty Images
A California jury concluded that Elon Musk defrauded Twitter shareholders in preparation for its $44 billion acquisition of the social media company, according to a verdict released Friday.
Total damages could reach $2.6 billion, plaintiffs’ lawyers said.
The class action, Pampena versus Musk, was originally filed in October 2022, after Musk completed his purchase of Twitter for $54.20 per share. He then renamed Company X, before merging it with his artificial intelligence company xAI, and then with SpaceX, his reusable rocket maker.
“It’s a great example of what you can’t do to the average investor – to people who have a 401k, to children, to pension funds, to teachers, to firefighters, to nurses,” Joseph Cotchett, an attorney for Twitter investors, told CNBC at the San Francisco courthouse. “That’s what this case was about. It wasn’t about Musk. It was about the entire operation.”
In an emailed statement, attorneys for Musk and Quinn Emanuel said: “We view today’s verdict, in which the jury found both for and against the plaintiffs and found no fraudulent schemes, to be a bump in the road. And we look forward to vindication on appeal.”
After Musk proposed buying Twitter in April 2022, his sentiment toward the deal quickly deteriorated when he questioned the company’s claimed level of bots, spam and fake accounts on its platform. Musk wrote in a tweet the following month that his acquisition was “temporarily on hold” until the Twitter CEO could prove that the level of his inauthentic accounts was around 5% shown in the company’s SEC filings.
Musk’s additional tweets and comments sent Twitter shares down nearly 10% in no time. single session. The jury deliberated for four days and unanimously concluded that Musk’s May 13 and May 17 tweets were materially false or misleading.
Former Twitter shareholders, including retail investors and options traders, argued that Musk’s remarks were a ploy to pressure the company’s board into selling to him at a lower price than his initial offer. They claimed it was motivated by falling stock prices at Teslawhich would force him to sell even more shares of the automaker than he had planned to finance the buyout.
The plaintiffs in the lawsuit said they sold shares at a price lower than $54.20 as a result of and in response to Musk’s messages and comments in press interviews. The potential damages figure is based on expert estimates of the impact of Musk’s about-face on the stock price during the class period.
Lawyers for Twitter investors have said it will take about 90 days before claims administration is set up, and then it will take a few months for the government to process the claims and for investors to begin recouping some of their losses.
Musk’s lawyers argued that their client’s remarks were based on valid concerns about bots, spam and fake accounts on Twitter, and did not constitute securities fraud or a scheme to drive down the company’s stock price.
The jury said that while Musk made false and misleading statements that harmed some Twitter shareholders, he did not engage in a specific scheme to defraud investors.
While the verdict is a scathing rebuke for Musk, the financial implications are minimal given his net worth, which currently stands at around $650 billion, according to Bloomberg.
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