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Elon Musk defends tweets in lawsuit alleging they caused Twitter stock to fall before acquisition - AP News

🏛️ Elon Musk is defending his actions in a class action lawsuit alleging he misled investors regarding his 2022 acquisition of Twitter.

⚖️ The civil trial is taking place in San Francisco at the U.S. District Court for the Northern District of California.

💰 Shares sold between May 13 and Oct. 4, 2022 are represented in the lawsuit, which claims Musk caused investors to lose millions.

📉 Plaintiffs allege Musk violated federal securities laws by trying to lower Twitter's stock price before purchasing it for $54.20 per share.

🤖 A key dispute centers on Musk’s claim that Twitter had far more bots than the 5% disclosed in regulatory filings.

🗣️ Musk stated on the stand that suggesting there were fewer than 20% bot accounts was like saying "the grass is green or the sky is blue."

📉 The company previously paid $809.5 million in 2021 to settle claims of overstating growth and user figures.

🏢 Twitter disclosed bot estimates to the SEC for years but noted their numbers might have been too low.

⚖️ Twitter's former CEO, Ned Segal, testified that the company did not file false filings misstating spam numbers.

🔍 Segal indicated the 5% spam account rate was actually closer to 1%.

📝 In 2017, Twitter restated finances after discovering it incorrectly included a third-party app's users in monthly counts.

⏰ Musk took the stand on the second day of his testimony at the shareholder trial.

👥 Expert witnesses followed Musk’s brief testimony during the proceedings.

Bullish Signals
  • Elon Musk continued to defend his actions during the Twitter shareholder trial in San Francisco on March 4, 2026, as he faces a class action lawsuit.
  • The company had paid $809.5 million in 2021 to settle claims it was overstating its growth rate and monthly user figures, demonstrating a history of financial transparency regarding errors.
  • Twitter's former CEO Ned Segal testified that the company did not file false filings to the SEC that misstated spam numbers.
  • Segal mentioned that Twitter once restated finances after it became aware of a mistake in its calculation of daily users, showing a commitment to accuracy when issues are identified.
  • In 2017, Twitter acknowledged and corrected overstated monthly user numbers due to including users from a third-party app it should not have, showcasing operational self-correction.
  • Segal testified that the spam account rate was actually closer to 1%, contradicting claims of higher rates that could undermine regulatory concerns.
Risk Factors
  • Elon Musk faces a class-action lawsuit alleging he misled investors and caused them to lose millions of dollars during the months leading up to his acquisition of Twitter.
  • The civil trial alleges Musk violated federal securities laws by taking calculated steps to drive down Twitter's stock price, potentially attempting to 'blow up' the deal or secure a lower purchase price.
  • Musk is accused of overstating the number of bots on Twitter; he claims there were at least 20% fake accounts compared to the 5% disclosed in regulatory filings prior to his $44 billion, $54.20 per share acquisition in October 2022.
  • Twitter previously paid $809.5 million in 2021 to settle claims it overstated growth rates and monthly user figures, highlighting ongoing issues with the accuracy of company metrics Musk inherited or altered.
  • Musk's legal defense has so far focused on defending his actions rather than admitting liability, facing a class-action lawsuit filed just before he took control of the company in October 2022.
  • Former CEO Ned Segal testified that Twitter did not file false filings misstating spam numbers and that the actual spam account rate was closer to 1%, contradicting Musk's assertions of widespread deception.
  • The lawsuit specifically represents shareholders who sold stock between May 13 and Oct. 4, 2022, seeking redress for alleged losses during a critical window leading up to the takeover.
Full Analysis
Elon Musk appeared in court on Thursday to defend his conduct in the months preceding his October 2022 acquisition of Twitter, now known as X, as he faces a class-action lawsuit alleging he misled investors regarding the company's value. The civil trial at the U.S. District Court for the Northern District of California centers on accusations that Musk violated federal securities laws by taking calculated steps to depress Twitter's stock price with the intent of either collapsing the deal or securing a lower purchase price, which was originally agreed upon at $44 billion or $54.20 per share. The lawsuit represents shareholders who sold their stock between May 13 and October 4, 2022, claiming they lost millions due to Musk's actions. A significant portion of the proceedings focused on Musk’s repeated assertions about the prevalence of bots on the platform, specifically contesting the 5% figure disclosed in regulatory filings as false. Musk testified that the number of fake and spam accounts was likely at least 20%, describing his certainty as comparable to stating "the grass is green or the sky is blue." He accused Twitter of lying about the bot account numbers while on the stand, a claim that contrasted with testimony from Twitter’s former CEO, Ned Segal, who stated that the actual rate was closer to 1% and maintained that the company did not file false filings misstating its spam numbers. Musk spent only a brief period on the witness stand for the second day of the trial before expert witnesses were called to address the stock price dynamics. The legal dispute acknowledges historical context regarding bot allegations, noting that Twitter had previously paid $809.5 million in 2021 to settle claims that it overstated its growth rate and monthly user figures. While Twitter has disclosed its bot estimates to the Securities and Exchange Commission for years with caveats that the numbers might be too low, this specific case challenges whether those disclosures were materially misleading to investors during the critical negotiation period leading up to the $54.20 per share valuation.