Elon Musk Faces Shareholder Lawsuit Over Twitter Stock Decline

A lawyer representing former Twitter shareholders accused Elon Musk of defrauding investors by publicly questioning the number of fake and spam accounts on the platform, leading to a decline in Twitter’s stock price in 2022. The case centers around Musk’s attempts to withdraw from or renegotiate his $44 billion acquisition of the social media company.

Allegations of Fraudulent Statements

Attorney Mark Molumphy argued before a federal jury in San Francisco that Musk intentionally misled shareholders with statements suggesting the proportion of bot accounts was significantly higher than the reported 5%, potentially reaching 20% or more. Molumphy claimed Musk disparaged the company and its executives after signing the merger agreement in April 2022, despite knowing about the potential underreporting of bot accounts.

Musk’s Defense

Musk’s lawyer, Michael Lifrak, countered that Musk had legitimate concerns about the prevalence of bots and was focused on accurately assessing the problem, not on reducing the purchase price. Lifrak asserted that Musk’s statements – two tweets and a podcast appearance – did not constitute securities fraud, and that plaintiffs failed to provide evidence of fraudulent intent.

Jury Deliberations and Potential Outcomes

The jury began deliberations on Tuesday, March 18, 2026, and was dismissed for the day without reaching a verdict. They are expected to resume deliberations on Wednesday. Jurors must determine whether Musk’s statements about bot accounts were fraudulent and if he intended to defraud shareholders by driving down the stock price. If the jury finds against Musk, they will then consider the amount of damages.

Timeline of Events

Musk began expressing doubts about the acquisition shortly after agreeing to the deal, initially stating the transaction was “temporarily on hold” due to concerns about bot numbers. On May 17, 2022, he tweeted that the purchase “cannot proceed” until Twitter provided proof that bot accounts represented less than 5% of the platform’s users. Twitter subsequently sued Musk to compel him to complete the acquisition, which he ultimately did in October 2022, renaming the platform X.

Musk’s Legal Battles

This case is one of several legal challenges Musk has faced. He has previously won lawsuits related to his electric car company Tesla, including a 2023 case concerning his pay package and another regarding his acquisition of Twitter. He is currently engaged in settlement discussions with the U.S. Securities and Exchange Commission (SEC) over allegations of delayed disclosure of his initial Twitter stock purchases in 2022.

Financial Context

The lawsuit involves investors who sold Twitter shares between May 13 and October 4, 2022. While the outcome could have financial implications, X represents a relatively small portion of Musk’s overall net worth, estimated by Forbes at $836.4 billion as of March 18, 2026. SpaceX’s recent acquisition of Musk’s AI company xAI, which housed X, created a company valued at approximately $1.25 trillion, potentially paving the way for an initial public offering as early as June.