SAN FRANCISCO - The fate of a high-profile shareholder lawsuit against Elon Musk moved to the jury on Tuesday after lawyers for both sides delivered closing arguments in federal court. Former Twitter shareholders who sold their stock between May 13 and October 4, 2022, say Musk’s public questioning of the social platform’s disclosure about fake and spam accounts - frequently called bots - caused the company’s stock to fall and harmed investors.
In his closing, plaintiffs’ attorney Mark Molumphy told jurors that Musk was responsible for depressing Twitter’s share price when he sought to back out of or renegotiate the agreed $44 billion purchase of the company. Molumphy said the billionaire had repeatedly cast doubt on Twitter’s reported bot rate, publicly suggesting on three occasions that the platform might be overrun with fake accounts and could have four or five times the 5% figure Twitter disclosed to investors.
Molumphy argued that Musk knew about an understatement of bogus accounts by the time he signed the April 2022 merger agreement and yet later disparaged the company and its leadership in a way that damaged shareholder value. "He trashed the company. Trashed the executives. And tanked the stock," Molumphy told the jury.
Defending Musk, attorney Michael Lifrak maintained that his client had legitimate concerns about the prevalence of bots and was trying to evaluate the scope of the problem rather than pursue a tactic to save on the purchase price. "Two tweets and a podcast does not equal securities fraud," Lifrak said in his closing statement, urging jurors to distinguish between protected commentary and a fraudulent scheme.
Lifrak summarized the plaintiffs’ position as rooted in a counterfactual claim: that had Musk remained silent, the share price would not have fallen. He argued the plaintiffs had not proven fraud. "The only thing that plaintiffs have told you is that if Mr. Musk hadn’t said anything, the stock wouldn’t have gone down. But they didn’t prove fraud," Lifrak said.
After the arguments, jurors began deliberations but were dismissed for the day without reaching a verdict. Court officials said they are expected to resume deliberations on Wednesday. Their task is to decide first whether Musk’s three public statements about bots were fraudulent and whether he engaged in a scheme to defraud Twitter shareholders by depressing the share price. If jurors find no fraud, they will return a verdict for Musk. If they find fraud, the jury will then consider damages.
The disputed statements trace to the period after Musk agreed to buy Twitter in April 2022. He publicly announced the deal was "temporarily on hold" while raising the possibility that the platform’s percentage of automated accounts could be as high as 20% or more. One focal point of the litigation is a May 17, 2022 tweet in which Musk wrote that the takeover "cannot go forward" until Twitter’s chief executive demonstrated that bots comprised less than 5% of accounts.
Twitter sued to compel Musk to complete the takeover, and the transaction closed in October 2022. The platform has since been rebranded as X and is now part of Musk’s rocket and satellite company SpaceX, according to evidence presented in court.
Context on litigation posture
The current case is one of several legal fights in which Musk has faced shareholder challenges. The defense has a recent record of courtroom victories, including a 2023 trial concerning his electric vehicle company and separate litigation over his Tesla compensation package, both of which he won, according to arguments presented to the jury.
In addition, Musk has been negotiating a potential settlement with the U.S. Securities and Exchange Commission over alleged delays in disclosing initial Twitter share purchases in 2022. That case is separate from the present shareholder suit and was referenced during courtroom argumentation.
Allegations, timeline and stakes
Plaintiffs allege that Musk’s public statements were a deliberate effort to cast doubt on Twitter’s accounts and thereby reduce the stock price during a critical window between May and October 2022, when some investors sold their holdings. Musk, they say, sought to avoid or renegotiate his $44 billion obligation to complete the transaction.
Musk completed the takeover in October 2022. Since then, corporate changes have included rebranding to X and the integration of the platform into SpaceX. At trial, counsel for Musk and the plaintiffs both emphasized that the contested event sequence began after the April 2022 merger agreement and involved public comments by the buyer.
Next steps
Jurors will determine whether the statements at issue were made with fraudulent intent and, if so, what damages should be awarded to affected shareholders. Deliberations resumed following the court’s schedule.