Close

Court Rules Against Elon Musk’s Attempt to Dismiss Twitter Takeover Lawsuit

Avatar
Court Rules Against Elon Musk’s Attempt to Dismiss Twitter Takeover Lawsuit

Eccentric billionaire Elon Musk finds himself at the center of a legal storm. The U.S. District Court in Northern California recently made a significant ruling, denying Musk’s plea to dismiss a lawsuit connected to his acquisition of Twitter, now rebranded as X. This lawsuit, initiated by former Twitter shareholders, accuses Musk of manipulating the company’s stock price ahead of his purchase in October 2022.

Impact of Musk’s Actions on Twitter’s Stock Value

The lawsuit sheds light on the dramatic fluctuations in Twitter’s stock value leading up to the acquisition. From a high of $71.69 in July 2021, the stock plummeted to $43.42 by March 2022. This decline, as the lawsuit suggests, might have encouraged Musk to perceive the acquisition as a bargain. Additionally, Musk’s use of his Tesla stock as collateral for a $12.5 billion loan to finance the deal, which subsequently dropped by about 37%, is believed to have motivated his actions.

Judge Stephen Breyer, overseeing the case, highlighted several of Musk’s statements, particularly his tweets, as a focal point of his decision. Notably, Musk tweeted about the acquisition being “temporarily on hold”, a move that investors claim was a strategic effort to devalue the company. Judge Breyer found these statements potentially misleading, especially considering Musk’s waived rights to due diligence in the acquisition process.

Musk’s approach to the Twitter takeover has been under intense scrutiny. The lawsuit points out Musk’s pattern of allegedly misleading statements, including claims about the proportion of fake accounts on Twitter and his ability to back out of the deal. While the court acknowledged some of Musk’s comments as mere opinions, others were deemed false or misleading, particularly those implying Musk had a right to specific data from Twitter before proceeding with the acquisition.

Investors assert that Musk’s actions and statements caused them significant financial harm. They claim that Musk’s delay in disclosing his growing stake in Twitter, as required by the Securities Exchange Act, allowed him to save approximately $143 million, while they missed out on potential profits.

About Author

scroll to top