Why Elon Musk Is Being Sued By Twitter Shareholders
Elon Musk purchasing Twitter has taken on yet another layer of complexity. Learn why shareholders are now suing the billionaire.
This article is more than 2 years old
Elon Musk’s pending purchase of Twitter has caused an eruption of controversy and heated emotions. Twitter employees have been vocal in voicing their grievances. Twitter CEO Parag Agrawal told the New York Times that not one person would “want to be in his shoes” as he attempts to navigate this monster and mess of a deal. Now Twitter shareholders are collectively lashing out at Musk by slapping the billionaire with a class-action lawsuit.
A small group of Twitter shareholders has filed a lawsuit alleging that Elon Musk knowingly and purposefully manipulated Twitter’s stocks for his own personal financial benefit. The filed court document specifically accuses Musk of driving Twitter stock downward subsequent to making his offer. “Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially…,” read a portion of the court filing. There is specific mention of the outlandish request Musk made asking Twitter to provide proof that less than 5% of all Twitter accounts are fake. The complaint goes on to allege that Musk has been partaking in these stock-weakening activities in order to ultimately find a way out of the deal.
As of now, it’s unclear if this class action filing against Elon Musk has any real merit. This is primarily because Elon Musk has not stated once that he wants out of the deal. That being said, he has been rather slow to move forward with it (from the public’s perspective at least). In fact, many of the initial loans that he acquired to fund the purchase have since expired. Still, the billionaire has asserted that he is prepared to replace any expired loans with his own sources of capital. Considering that he is among the richest people on the entire globe, it’s more than logical to think that he could stand by that promise.
Ultimately, though, it’s up to the courts to decide whether the complaint filed by the Twitter shareholders will be permissible in court. If the court does find the lawsuit filing to have legal merit, the shareholders have clearly outlined the damages they are seeking. Specifically, the suit is looking to make sure that Elon Musk honors his initial bid of $54.20 per share despite the fact that each of Twitter’s shares is hovering at nearly $20 less than that at present.
Regardless of what happens with the lawsuit, what is clear is that when (and if) Elon Musk does officially take over Twitter’s reins he’s going to have a lot to contend with. The New York Times pointed out that when Agrawal hopped on board back in November of 2021 he was outlining plans to address multiple key areas where Twitter needed improvement. Agrawal made specific mention of the integrity of the platform itself, the technologies behind the business, and the need to redefine what actual leadership looks like. Musk will now need to addresses those areas, as well as all the contentious and worried employees that will soon be working under him.
