Elon Musk’s 2022 bid to buy Twitter has generated a host of legal challenges, and one of the cases currently before the court involves a lawsuit filed by Twitter shareholders who accuse the billionaire of trying to drive down Twitter’s stock price in 2022. Musk is scheduled to testify in court on April 3.
Image source: Unsplash, Christian Lue
Since even before his rapprochement with Donald Trump, the current owner of the social network X, which he renamed from Twitter, was not eager to waste his time on litigation, his lawyers initially tried to have the case heard in absentia. However, as Bloomberg notes, Elon Musk eventually agreed to meet with the plaintiffs’ representatives in Washington on April 3 to testify in the case.
The plaintiffs insist that in 2022, after announcing his intention to buy Twitter for $44 billion, Elon Musk tried to bring down the stock price of the company in order to save money on the purchase, but shareholders predictably suffered from this. Ultimately, under threat of legal coercion to complete the deal, Musk bought Twitter in October 2022 for the original $44 billion, but he frayed investors’ nerves quite a bit.
In December 2023, a federal judge in San Francisco rejected Musk’s request to dismiss the case because it found that his statements in 2022 misrepresented to investors the state of Twitter’s business in a material way. In January of this year, the U.S. Securities and Exchange Commission also charged Musk with intentionally failing to disclose in April 2022 that he had increased his Twitter stake beyond an undisclosed 5%. By gaining a share price advantage over the company’s shares, which predictably rose after the disclosure, Musk caused more than $150 million in damages to uninformed investors, the agency found.