Court Rejects Musk's Bid to Dismiss Twitter Takeover Lawsuit
Former Twitter shareholders sue Musk for manipulating stock price before acquisition.
Twitter stock soared high in 2021 but plummeted before Musk’s purchase, raising questions about his motives.
Investors claim Musk used misleading statements about fake accounts and data access to manipulate the deal.
Elon Musk, the eccentric billionaire, is currently facing legal challenges over his acquisition of Twitter, now rebranded as X. The U.S. District Court in Northern California recently rejected Musk’s attempt to dismiss a lawsuit filed by former Twitter shareholders. They accuse Musk of manipulating the company’s stock price leading up to his purchase in October 2022.
Twitter Stock’s Wild Ride
The lawsuit sheds light on the rollercoaster ride of Twitter’s stock value. Soaring to $71.69 in July 2021, it took a dive to $43.42 by March 2022. Investors claim this drop may have motivated Musk to see the acquisition as a good deal. Musk used his Tesla stock as collateral for a $12.5 billion loan, but its subsequent 37% drop added complexity to the case.
Judge Stephen Breyer, overseeing the case, highlighted Musk’s statements, especially his tweets. Musk’s tweet about the acquisition being “temporarily on hold” is seen as a strategic move to devalue the company, according to investors. Judge Breyer found these statements potentially misleading, given Musk’s waived due diligence rights.
Musk’s Unconventional Twitter Takeover
Musk’s unconventional approach to the Twitter takeover is under scrutiny. The lawsuit points to a pattern of allegedly misleading statements, including claims about fake accounts on Twitter and Musk’s ability to back out of the deal. While some of Musk’s comments were considered opinions, others were seen as false or misleading, implying Musk had a right to specific data from Twitter before finalizing the acquisition.
Investors in the lawsuit argue that Musk’s actions and statements caused them significant financial harm. They say Musk’s delay in disclosing his growing stake in Twitter, as required by the Securities Exchange Act, allowed him to save about $143 million. Meanwhile, they claim to have missed out on potential profits due to Musk’s alleged manipulative tactics.
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