Elon Musk to take stand in Twitter shareholder trial accusing him of
deflating stock before purchase
[March 04, 2026] By
BARBARA ORTUTAY and MICHAEL LIEDTKE
SAN FRANCISCO (AP) — Elon Musk is expected to take the stand in a
shareholder trial on Wednesday in San Francisco, where he's accused of
making false and misleading statements that drove down Twitter's stock
price before he bought the social media platform for $44 billion in
2022.
The lawsuit was filed in October 2022 in the U.S. District Court for the
Northern District of California on behalf of Twitter shareholders who
sold the stock between May 13 and Oct. 4, 2022, a few weeks before
Musk's purchase of Twitter was finalized. It claims Musk violated
federal securities laws by making false, public statements that “were
carefully calculated to drive down the price of Twitter stock.”
The billionaire Tesla CEO reached a deal to buy Twitter and take it
private in April 2022. On May 13, however, he declared his plan
“temporarily on hold” and said he needs to pinpoint the number of spam
and fake accounts on the platform. Twitter's stock tumbled as a result.
A few days later, he tweeted that the deal “cannot go forward” and
claimed that almost 20% of Twitter accounts were “fake,” according to
the lawsuit.
Musk's May 13 tweet — “Twitter deal temporarily on hold pending details
supporting calculation that spam/fake accounts do indeed represent less
than 5% of users” — was “false because the buyout was not, in fact,
‘temporarily on hold,’” the lawsuit says. That's because Twitter did not
agree to put the deal on hold, and there was nothing in the merger
agreement the two parties signed that allowed Musk to put it on hold,
according to the lawsuit.
In the following weeks, Musk continued to try to delay or get out of the
deal, which the lawsuit claims he did in the form of false, disparaging
statements about Twitter's business that drove the San Francisco
company's stock down sharply.
In July 2022, Musk doubled down on the bots issue and said he would
abandon his offer to buy Twitter after the company failed to provide
enough information about the number of fake accounts. That's even though
the lawsuit notes that Musk waived due diligence for his “take it or
leave it” offer to buy Twitter. That means he waived his right to look
at the company’s nonpublic finances.
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Elon Musk attends the annual meeting of the World Economic Forum in
Davos, Switzerland, Jan. 22, 2026. (AP Photo/Markus Schreiber, File)
 The stock closed at $36.81 on July
8, when Musk tweeted he was abandoning the deal over the fake
accounts issue. That's 32% below Musk's offer price of $54.20 per
share.
“To try to renegotiate the price or delay the merger, Musk made
materially false and misleading statements and omissions, and
engaged in a scheme to deceive the market, all in violation of the
law,” the lawsuit says.
The problem of bots and fake accounts on Twitter wasn't new. The
company had paid $809.5 million in 2021 to settle claims it was
overstating its growth rate and monthly user figures. Twitter also
disclosed its bot estimates to the Securities and Exchange
Commission for years, while also cautioning that its estimate might
be too low.
Twitter sued Musk to force him to complete the deal, and Musk
countersued. On Oct. 4, Musk offered to go through with his original
proposal to buy Twitter for $44 billion, which Twitter accepted. The
deal closed later that month. In the ensuing months, Musk slashed
the company's workforce, gutted its trust and safety team and rolled
back content moderation policies. In July 2023, he renamed Twitter
as X.
This isn’t the first time that Musk has been dragged into court to
defend himself against allegations of duping investors with his
social media posts. Three years ago, Musk spent about eight hours
testifying in a San Francisco federal trial about his plans to buy
Tesla — the electric automaker that he still runs as publicly traded
company — for $420 per share in a proposed 2018 deal that never
materialized. A nine-member jury absolved Musk of wrongdoing in that
case.
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