A Twitter contributor is suing Elon Musk for vandalizing company stock
A new lawsuit was filed on behalf of Twitter shareholders against Elon Musk in federal district court in San Francisco Wednesday night, alleging that the Tesla CEO actively manipulated the company’s stock for personal gain.
The complaint focuses on Musk’s behavior since signing the purchase agreement with Twitter’s board of directors on April 25, in particular his recent statement that the deal “could not go forward” without more information about automated accounts on the platform.
After the agreement was signed, the complaint alleges, “Musk proceeded to make statements, send tweets, and engage in behavior intended to create doubt about the transaction and drive Twitter’s stock significantly lower in order to create leverage that Musk hopes to use to either back off the purchase or renegotiate the purchase price.”
“As detailed here, Musk’s conduct was, and continues to be, unlawful, in violation of California corporate law, and in contravention of the contractual terms he agreed to in the transaction,” the complaint continues.
A lawsuit is a proposed class action brought by a small group of shareholders but demanding damages that will be distributed to anyone who owns the company’s stock.
Twitter declined to comment on the case.
While Musk’s behavior is unusual, there has been no apparent attempt by the Tesla CEO to cancel or renegotiate the deal. However, the complaint’s claims are supported by the unusual behavior of Twitter’s stock, which continues to trade well below its agreed purchase price. As of press time, Twitter shares are trading at less than $40, reflecting significant skepticism in the market that the deal will close at $54.20 as agreed.
Notably, the complaint asks for an injunction, which could force Musk to buy Twitter at the agreed-upon price.
Uncertainty about Musk’s public statements had already had a material impact on the takeover bid, sending Tesla stock so low that Musk had to abandon plans to secure financing through loans against his holdings in the company. Musk told the Securities and Exchange Commission earlier this week that he would provide an additional $6 billion in equity funding to offset expired loans.