Musk Takes Stand in Twitter Stock Manipulation Trial as Investors Claim $44 Billion Deal Fraud

Elon Musk is scheduled to testify Wednesday in a securities fraud trial where investors accuse him of manipulating Twitter’s stock price to save billions on his $44 billion acquisition of the social media platform in 2022.

The case, filed in October 2022 in the U.S. District Court for the Northern District of California, represents Twitter shareholders who sold stock between May 13 and October 4, 2022, weeks before Musk finalized his purchase. The lawsuit alleges Musk violated federal securities laws by making statements according to The Boston Globe that were “carefully calculated to drive down the price of Twitter stock.”

After reaching an agreement to buy Twitter for $54.20 per share in April 2022, Musk publicly declared on May 13 that the deal was “temporarily on hold” while he investigated spam and fake accounts. The Boston Globe reports Twitter’s stock tumbled as a result. By July 8, when Musk tweeted he was abandoning the deal over the fake accounts issue, the stock closed at $36.81—32% below his offer price.

The Core Allegations

Investors contend Musk’s May 13 tweet claiming the deal was “temporarily on hold” was false because The Boston Globe reports “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.” The lawsuit further alleges Musk’s concerns about bot accounts were a pretext to renegotiate or escape the deal.

During opening statements Monday, according to Bloomberg Law, investors’ attorney Mark Molumphy told jurors “we’re here today because Elon Musk cheated investors” in an attempt to save billions on the acquisition. The evidence, he said, “will show Mr Musk knew exactly what he was doing” by tweeting false and misleading information.

Musk’s defense attorney Michael Lifrak countered that none of the information in Musk’s tweets was false. He told jurors that Musk will testify his concerns about Twitter’s customer base “were real and weren’t a fraud,” according to Bloomberg Law.

Plaintiff Testimony Reveals Losses

Brian Belgrave, a named plaintiff, testified that he bought 15,000 Twitter shares between May and June 2022, anticipating he would sell them at $54.20 once the acquisition closed. Instead, according to Courthouse News Service, he sold his shares in July 2022 for around $33 after Musk indicated he was backing out. “I felt that I got cheated, lied to, and I lost a lot of money,” Belgrave told the jury.

The lawsuit notes that bot concerns were hardly new territory. The Boston Globe reports Twitter had paid $809.5 million in 2021 to settle claims it was overstating its growth rate and monthly user figures, and had disclosed bot estimates to the SEC for years. Critically, the lawsuit points out that Musk waived due diligence rights in his “take it or leave it” offer, meaning he waived his right to examine Twitter’s nonpublic finances.

Musk’s History with SEC Scrutiny

This trial represents Musk’s latest courtroom battle over his social media communications. In 2023, a San Francisco federal jury absolved Musk of wrongdoing in a case about his 2018 tweet claiming he had “funding secured” to take Tesla private at $420 per share. That incident led to a 2018 SEC settlement requiring Musk and Tesla to each pay $20 million in fines and mandating pre-approval of Musk’s tweets about Tesla, according to SEC.

Musk also faces a separate SEC lawsuit filed in January 2025 alleging he failed to properly disclose his Twitter stock purchases in early 2022, allowing him to buy shares at artificially low prices. According to SEC, that suit claims Musk saved at least $150 million by not filing required beneficial ownership reports on time.

Trial Dynamics and Defense Strategy

Jury selection proved contentious in a city where Musk’s reputation has polarized opinion. According to Hoodline, roughly half of the prospective jurors were dismissed for admitting they could not be impartial, with many voicing negative views of Musk. Nine jurors were ultimately seated from an initial pool of approximately 90 people.

Musk’s defense team, led by Alex Spiro of Quinn Emanuel Urquhart & Sullivan, is challenging whether the plaintiffs can prove Musk’s tweets directly caused their losses. This mirrors Musk’s defense in the 2023 Tesla trial, where his legal team successfully argued it was impossible to link specific tweets to stock price movements. Bloomberg Law notes that legal observers have nicknamed him “Teflon Elon” for his track record of winning high-stakes legal battles.

The trial, presiding over by U.S. District Judge Charles R. Breyer, is scheduled to continue through March 16.

What to Watch

Musk’s testimony Wednesday will be critical. His willingness to engage directly with juries has previously worked in his favor—he spent eight hours on the stand in the 2023 Tesla case and won a swift acquittal. Whether his unfiltered communication style resonates with this jury or reinforces the plaintiffs’ narrative of deliberate manipulation will likely determine the outcome.

Beyond this case, the verdict could establish precedent for executive liability when public statements about pending deals move markets. If investors prevail, Tech executives may face heightened scrutiny over social media communications during acquisition negotiations. The separate SEC case over disclosure timing, currently in pre-trial proceedings in Washington, D.C., adds additional legal and financial exposure.

For Musk, who continues to run Tesla, SpaceX, and X, the convergence of multiple Securities Fraud allegations threatens both his financial standing and his freedom to communicate directly with markets—a practice that has defined his public persona and business strategy for over a decade.