Following a rare trial in a federal securities class action lawsuit, a civil jury late last week found that statements Elon Musk made on social media in 2022 about his proposed $44 billion acquisition of Twitter misled investors. However, the jury also found that the plaintiff had not made the case that certain other statements by Musk were misleading. The jury’s verdict has a number of interesting implications, as discussed below. A copy of the jury’s March 20, 2026 verdict form can be found here.

The Twitter Acquisition

As detailed here, on April 14, 2022, Musk made an unsolicited offer to purchase Twitter. Twitter’s board’s initial moved to resist the deal, but on April 25, 2022, the company’s board voted unanimously to accept Musk’s buyout offer of $44 billion. However, shortly after the company agreed to the purchase, Musk began backing away from the deal.

In July 2022, Musk announced his intention to terminate the agreement, among other things claiming that the company had not upheld its agreement to crack down on spambot accounts. The company filed a lawsuit in Delaware Chancery Court against Musk seeking to enforce the deal. Trial in the company’s lawsuit against Musk was set for October 2022. Shortly befor trial in that case was set to take place, Musk announced he was prepared to go forward with the deal. Musk’s acquisition of Twitter closed on October 28, 2022.

The Securities Class Action Lawsuit

On October 10, 2022, Giuseppe Pampena, a Twitter shareholder, filed a securities class action lawsuit in the Northern District of California against Musk, alleging that in May 2022, during the turbulent period when Musk was starting to back away from the Twitter deal, Musk made a series of statements on Twitter and elsewhere, with the intent of depressing Twitter’s share price, in order to allow Musk to gain negotiating leverage or escape the deal.

The plaintiff’s amended complaint, which can be found here, refers to a series of four tweets Musk posted on Twitter, including in particular a May 13, 2022 tweet, in which Musk said that the deal was “temporarily on hold” because of disagreements with the company over the amount of bot traffic on Twitter’s platform; and a May 17, 2022 tweet, in which, among other things, Musk claimed that more than 20% of Twitter’s traffic came from fake accounts, and therefore that the deal “cannot move forward.” The amended complaint alleged that other statements Musk made, on Twitter and elsewhere, were also misleading.

The plaintiff essentially alleges that Musk made the allegedly misleading statements in order to drive down Twitter’s share price. The plaintiff alleges that Musk sought to depress Twitter’s price or to get out of the deal because he had agreed to sell some of his shares of Tesla to finance the Twitter deal, and after the Twitter deal was announced Tesla’s share price had dropped, meaning that the deal could require Musk to sell more shares of Tesla than he had planned.

The plaintiff represented a class of investors who sold Twitter’s stock or call options or sold put options between May 13, 2022, and October 4, 2022. The plaintiff basically alleged that they would not have sold their securities if they had been aware that Musk’s statements had manipulated the market price for the securities.

Musk moved to dismiss the plaintiff’s amended  complaint. In December 2023, Northern District of California Judge Charles R. Breyer denied the motion to dismiss in part as to certain of the allegedly misleading statements. In September 2024, Judge Breyer granted the plaintiff’s motion for class certification.

The Trial

Trial in the case commenced on March 2, 2026. During the trial Musk took the stand for two days, among other things acknowledging that the May 13 Tweet (“Twitter deal temporarily on hold…”) “may not be my wisest tweet.” According to Law360 (here), Musk testified that “the company had lied about the amount of spam and fake accounts on the platform but that he eventually paid the full $44 billion offer because a Delaware Chancery Court judge overseeing litigation about the sale was ‘extremely biased’ against him.”

During the trial, the lawyers involving on both sides of the Twitter deal testified. There were also, according to Law360, “moments of heated exchange” during the trial, including a March 6 dispute with “raised voices” and that ended with the Judge urging the lawyers to cool down and “gain composure.” The next day, Musk’s lawyers sought to have the Judge declare a mistrial, citing alleged “improper conduct” by the plaintiff’s lawyers, among other things. The court denied the motion.

The jury deliberated for over 20 hours over the course of four days before reaching its unanimous verdict.

The Verdict

The jurors returned a split verdict. The jury did find that plaintiff had sufficiently established that two of Musk’s tweets – the May 13 tweet (“deal temporarily on hold”) and May 17 tweet (deal “cannot move forward” because more than 20% of traffic is fake) – misled investors. However, the jury also found that the plaintiff had not sufficiently established his claims of an overall “scheme to defraud” Twitter investors, and that the plaintiff had not established that other statements by Musk were misleading.

The jury determined the value of shareholders’ losses, but it did not determine an aggregate or total amount of damages. Rather, the jurors were asked to determine the amount of damages incurred on each of the 98 trading days during the class period. The jury determined that the per-share, per-day damages across the period ranged between $3 and $8 dollars a day. In the Law360 article, one of the plaintiff’s lawyers is quoted as saying that the aggregate damages could total $2.6 billion.

The Law360 article quotes one of Musk’s counsel as saying that “we look forward to vindication on appeal.”

Discussion

As readers undoubtedly are aware, it is extremely rare for securities class action lawsuits to go to trial. Out of the more than 7,000 securities class action lawsuits that have been filed since 1995, fewer than 30 have gone to trial. The adverse jury verdict here and the potentially massive size of the total damages underscores why so many defendants decide not to risk a trial.

The outcome of this case arguably represents something of a rare court setback for Musk. Musk has in the past been dubbed in the press as “Teflon Elon.” Indeed, among the few securities class action lawsuits that have gone to trial in recent years was a one that involved Musk and his electric vehicle company, Tesla. (That case also involved an allegedly misleading tweet by Musk, involving his statement about an alleged plan to take Tesla private, with “funding secured.”) As discussed at length here, the jury trial in that earlier case resulted in a defense verdict.

This case and the earlier Tesla case do show how statements on social media can lead to securities class action litigation – and the verdict in this case shows how social media statements can lead to substantial liability under the securities laws. It certainly is no defense that “it was just a social media post.” This case outcome underscores the fact that if someone makes market moving statements, it can be the potential basis for liability, even if “only” made on social media. Musk tried to downplay the significance of his statements on social media, but the fact is that, even if on social media, statements can have consequences, and potentially legal implications.

The outcome of this case has obvious implications for corporate-communications policies; companies, particularly those with CEOs with substantial online followings, will want to consider executives’ use of social media, especially concerning sensitive or important company activities. In this case, Musk’s social media activities had consequences only for himself, not for any of his companies, but corporate executives’ social media activities could have significant ramifications for their companies.

Defense counsel, quoted in the Law360 article, refers to the trial outcome as a “bump in the road,” which arguably reflects a certain amount of bravado in the face of a largely adverse development. But there is some truth to the statement; as noteworthy as the verdict is, the trial itself was just another procedural stage in a case that may have a long way to go yet. The case will now go up on appeal (or will do so after all post-trial motions are addressed). The story of this case may have much more to be told.

There is a final element here, and arguably the thing that makes the trial verdict particularly interesting, and that is that it involves Elon Musk – a successful businessman, a widely recognized and even powerful individual, and supposedly the richest man in the world. No one, this outcome of this case seems to say, is above the law.

Because schadenfreude can be such an unattractive reaction to others’ misfortune, that is all I am going to say here about Musk.