Did Elon Musk’s bot comments hurt Twitter investors? Court battle puts spotlight on 2022 deal

A lawyer representing former Twitter investors told a federal jury in San Francisco that Elon Musk deliberately undermined the company in 2022 by publicly questioning the number of fake accounts on the platform.

Attorney Mark Molumphy argued that Musk criticised both the company and its leadership through repeated statements. He said these remarks suggested that the proportion of bots could be far higher than Twitter’s disclosed figure of 5 percent. According to the argument presented in court, these claims affected market confidence and contributed to a decline in the company’s share price.

The case involves investors who sold their Twitter shares between May and October 2022. This period coincided with Musk’s public comments about the acquisition, including statements that the deal was “on hold” and warnings that it might not proceed without clarity on bot data.

The lawsuit argues that these statements influenced investor decisions and market behaviour. The timing of the remarks and subsequent stock movements form a central part of the claims being examined by the jury.

Musk’s lawyer, Michael Lifrak, rejected the allegations and told jurors that Musk’s concerns about spam accounts were legitimate. He argued that Musk was attempting to evaluate the business properly before completing the acquisition.

Lifrak stated that limited public comments, including two tweets and a podcast appearance, do not amount to securities fraud. He also argued that the plaintiffs had not demonstrated any intent by Musk to mislead investors. According to the defence, changes in stock prices alone are not sufficient to establish fraud.

The jury is now tasked with determining whether Musk’s statements were misleading and whether they were part of an effort to influence Twitter’s share price. If liability is established, jurors will then decide the extent of damages.

The case centres on whether Musk’s public communication during the acquisition process crossed the line from business commentary to actionable misconduct under securities law.

Despite the dispute, Musk went on to complete the acquisition of Twitter in October 2022 for 44 billion dollars. Following the takeover, he rebranded the platform as X.

The platform was later acquired by his space venture, SpaceX, in the previous month. The developments mark the latest phase in the evolution of the company after the high-profile acquisition.