A small group of Twitter shareholders has filed a class action lawsuit against Elon Musk in San Francisco federal district court accusing him of having manipulated the value of the social network’s shares for his own benefit. The measure comes just a couple of weeks after the South African tycoon shared that he had made the decision to “paralyze” the purchase of the platform until it demonstrated that, effectively, only 5% of the accounts that swarm inside it are false or work as spam bots, as the site of the little bird claims.
In the complaint, advanced by the American media ‘The Verge’, the shareholders – who hope to obtain compensation for damages – focus on Musk’s conduct and statements regarding Twitter since last April 25, the day in which it was learned that the father of companies such as Tesla or SpaceX had reached an agreement to purchase the site, disbursing approximately 41,000 million euros, 54.20 dollars per share.
As of today, as a result of the paralysis of the agreement, the price of the shares is stagnant at 39.5 dollars.
“Musk proceeded to make statements, tweets, and engage in conduct designed to cast doubt on the deal and substantially reduce the value of Twitter stock to gain leverage that Musk hoped to use to back out of the purchase or renegotiate the purchase price.” , is sustained in the lawsuit.
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A small group of Twitter shareholders has filed a class action lawsuit against Elon Musk in San Francisco federal district court accusing him of having manipulated the value of the shares of the social network for his own benefit. The measure comes just a couple of weeks after the South African tycoon shared that he had made the decision to “paralyze” the purchase of the platform until it demonstrated that, effectively, only 5% of the accounts that swarm inside it are false or work as spam bots, as the site of the little bird claims.
In the complaint, advanced by the American media ‘The Verge’, the shareholders – who hope to obtain compensation for damages – focus on Musk’s conduct and statements regarding Twitter since last April 25, the day in which it was learned that the father of companies such as Tesla or SpaceX had reached an agreement to purchase the site, disbursing approximately 41,000 million euros, 54.20 dollars per share.
As of today, as a result of the paralysis of the agreement, the price of the shares is stagnant at 39.5 dollars.
“Musk proceeded to make statements, tweets, and engage in conduct designed to cast doubt on the deal and substantially reduce the value of Twitter stock to gain leverage that Musk hoped to use to back out of the purchase or renegotiate the purchase price.” , is sustained in the lawsuit.
Attention is also drawn to the fact that the tycoon had been buying shares of the social network in silence since January. When April arrived, before the purchase agreement crystallized, he already owned 9.2% of the company. “By delaying the disclosure of his participation in Twitter, Musk tried to manipulate the market by buying Twitter shares at an artificially low price,” argue the plaintiffs, who emphasize that, thanks to this conduct, the executive managed to save, at the time, about 156 million dollars.
around the price
The shareholders also point out that “Musk’s conduct was and continues to be illegal, in violation of the California Corporations Code and contrary to the contractual terms that he agreed to in the deal.”
In this regard, it should be remembered that, in accordance with the shared purchase contract with the United States Securities and Exchange Commission (SEC), the businessman undertook to the current management of the social network not to publish messages that could “belittle the company or any of its representatives”. Something that, according to the plaintiffs, has not been fulfilled. As they point out, the company has “lost $8 billion in valuation since the purchase was announced.”
After Musk announced his plans to halt the Twitter purchase, the platform’s shares fell to hover around $37. A much lower cost than Musk agreed to pay at the time to gain full control of the social network. Meanwhile, the value of Tesla, the crown jewel of Musk’s business empire and, at first, the main source of financing for the acquisition of the little bird site, continues to fall. In just one month, his shares have gone from costing more than 1,000 dollars to the 700 in which they move today.
Now, the tycoon himself could be trying to renegotiate the purchase price downward, according to several US media. ‘The New York Times’ reported on May 16 that the tycoon, at a conference held in Miami just a few days after announcing his intention to paralyze the purchase of the social network, stated that the revision of the agreed price “is not out of the discussion.” In the event that, finally, the agreement does not materialize, the businessman may have to compensate the platform with a payment of 1,000 million dollars.