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Elon Musk took the stand in a San Francisco courtroom Wednesday to defend himself against allegations that he deliberately misled Twitter investors during his turbulent $44 billion acquisition of the social media platform in 2022.
The billionaire, dressed in a black suit and tie, offered defiant testimony in the civil trial stemming from a class-action lawsuit filed shortly before he completed the Twitter takeover in October 2022. The suit represents shareholders who sold their Twitter stock between May 13 and October 4, 2022, alleging Musk violated federal securities laws through calculated efforts to drive down the company’s share price.
“I was pretty upset with the Twitter board because I felt they had engaged in fraud,” Musk testified, maintaining his long-held position that Twitter’s leadership deceived him about the percentage of fake or “bot” accounts on the platform.
When questioned about whether he had threatened to “hunt down” Twitter’s board unless they returned to negotiations for a revised sales price, Musk didn’t deny the possibility. “There were a lot of threats going back and forth from both sides,” he acknowledged.
The bot controversy wasn’t new when Musk negotiated the deal. Twitter had previously paid $809.5 million in 2021 to settle claims it overstated growth rates and user figures. The company had also disclosed its bot estimates to the Securities and Exchange Commission for years, while cautioning those figures might be too low.
Musk repeatedly characterized Twitter’s assertion that only about 5% of accounts were bots as “BS” during his testimony.
The lawsuit centers on claims that Musk made misleading statements about the Twitter deal before announcing in July 2022 that he was terminating the agreement. After his withdrawal, Twitter sued in Delaware Chancery Court to force completion of the original deal. Just before that case was set to go to trial, Musk reversed course and agreed to the original purchase price of $54.20 per share.
In court, Musk attributed his decision to complete the acquisition to legal advice, claiming his attorneys told him that Delaware Chancery Court Chancellor Kathleen St. Jude McCormick was “extremely biased” against him, giving him no chance of prevailing. He noted that McCormick later voided his $55 billion Tesla pay package in January 2024, though this occurred 15 months after the Twitter takeover was finalized. The Delaware Supreme Court ultimately overturned McCormick’s ruling.
By attributing his belief in McCormick’s alleged bias to legal counsel, Musk potentially shielded himself from extensive questioning through attorney-client privilege protections. However, U.S. District Judge Charles Breyer indicated he might rule on this matter later in the trial, which is scheduled to continue through March 19.
Musk contended that his decision to honor the original sales price significantly benefited most Twitter shareholders. “I can’t control whether people sell their stock, but everyone who held the stock fared extremely well,” he stated.
However, during the period of uncertainty caused by Musk’s attempted withdrawal, Twitter shares fell below $33—approximately 40% below the purchase price—harming shareholders who sold during this period.
This isn’t Musk’s first courtroom battle over alleged investor deception. Three years ago, he spent about eight hours testifying in another San Francisco federal trial regarding his unrealized 2018 proposal to take Tesla private at $420 per share. In that case, a jury found him not liable for any wrongdoing.
Before concluding Wednesday’s testimony, Musk acknowledged his tendency toward transparency on social media: “What I think privately is what I say publicly.”
The trial represents a significant legal challenge for Musk, who has since renamed Twitter as “X” and implemented sweeping changes to the platform. As the world’s richest person, with an estimated fortune of $841 billion, the $44 billion Twitter acquisition represents only a fraction of his wealth.
Musk is expected to return to court Thursday to continue his testimony in the ongoing trial.
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7 Comments
Musk’s defense against allegations of misconduct seems to hinge on his belief that Twitter misled him about bot accounts. It will be interesting to see if he can substantiate that claim in court.
Shareholders who sold their Twitter stock during this period will be closely watching the outcome of this trial. Their claims of securities law violations by Musk could have significant financial implications.
Musk’s testimony about feeling deceived by Twitter’s leadership is a bold claim. The court will need to carefully examine the evidence on both sides to determine the merits of his position.
Indeed. Establishing the truth around the bot account issue will be crucial in assessing Musk’s defense.
This trial represents another chapter in the ongoing saga surrounding Musk’s acquisition of Twitter. The outcome could have ripple effects on the social media landscape and Musk’s reputation as a business leader.
The back-and-forth threats between Musk and Twitter’s board suggest a contentious negotiation process. Hopefully the legal proceedings can shed light on the specifics of what transpired behind the scenes.
Agreed. Transparency around the negotiations could help inform the public’s understanding of this high-profile acquisition saga.