A federal jury in San Francisco delivered a significant verdict on Friday, March 20, 2026, finding Tesla and SpaceX CEO Elon Musk liable for making misleading statements to investors during the tumultuous 2022 battle to acquire the social media platform then known as Twitter. The decision centers on two public remarks Musk made in May 2022 that the jury concluded led shareholders astray regarding the status and viability of the $44 billion takeover deal.
The jurors, however, drew a clear line in their verdict. They explicitly rejected the broader allegation presented by plaintiffs that Musk had orchestrated an intentional scheme to defraud shareholders. This narrower finding of liability, rather than a full fraud verdict, could influence the final damage calculation and provides Musk's legal team with arguments to limit the eventual financial penalty. The plaintiffs' attorneys have indicated that damages in the case could reach into the billions of dollars, though the exact amount will be determined in a subsequent proceeding.
The Core of the Case: Two Key Statements
The class action lawsuit was filed by former Twitter shareholders—the company has since been rebranded as X—and focused on trading activity between May 13 and October 4, 2022. Musk had already committed in April of that year to acquiring Twitter for $54.20 per share. The plaintiffs argued that Musk subsequently sought to depress the company's stock price, publicly calling into question Twitter's metrics regarding bot and spam accounts.
The jury specifically found Musk liable for his May 13, 2022, tweet declaring the deal was "temporarily on hold" pending details supporting Twitter's claim that spam and fake accounts constituted less than 5% of users. He was also found liable for a May 17 statement that the deal "cannot go forward" unless Twitter's then-CEO, Parag Agrawal, publicly proved that bots made up under 5% of the user base. The jury cleared Musk regarding comments he made during a May 16 appearance on the "All-In" podcast.
Contrasting Trial Narratives
During the trial, starkly different narratives emerged. Musk maintained that his concerns about the prevalence of bots on the platform were genuine and asserted that Twitter's executives had misrepresented the company's metrics. Investors countered that Musk, having soured on the deal he initially championed, used the bot issue as a pretext to either exit the agreement entirely or renegotiate its terms at a lower price. Testimony was heard from key former Twitter executives, including ex-CEO Parag Agrawal and ex-CFO Ned Segal.
In closing arguments, plaintiffs' attorney Mark Molumphy contended that Musk "trashed the company" and "tanked the stock." Musk's defense lawyer, Michael Lifrak, argued that "Two tweets and a podcast does not equal securities fraud," emphasizing the lack of an intentional scheme. Musk himself testified that shareholders who held onto their stock ultimately benefited because he was forced to complete the acquisition at the original $54.20 per share price after Twitter successfully sued for specific performance in Delaware Chancery Court.
Legal Context and Parallel Proceedings
This verdict marks a notable legal setback for Musk, contrasting with a previous victory in a 2023 San Francisco trial concerning his infamous 2018 tweet about having "funding secured" to take Tesla private, in which jurors found in his favor. The decision also arrives amid other ongoing regulatory challenges for the billionaire.
Just days before this jury ruling, Musk and the Securities and Exchange Commission (SEC) notified a Washington, D.C., court that they are working on a "potential resolution" to a separate SEC lawsuit. That case accuses Musk of failing to timely disclose his initial accumulation of Twitter stock. The regulator alleges Musk waited 11 days past the regulatory deadline, allowing him to purchase over $500 million in shares at below-market prices and save approximately $150 million before the market was aware of the size of his stake.
The outcome of this civil trial underscores the significant market impact and legal scrutiny surrounding Musk's public communications during major corporate transactions. While he avoided a finding of intentional fraud, the liability verdict reinforces the legal obligations executives hold when making public statements that can materially influence investor behavior and stock prices. The focus now shifts to the damages phase, where the financial consequences for Musk will be quantified.
