Elon Did Some Securities Fraud

In April 2022, Elon Musk signed an agreement to buy Twitter Inc. for $54.20 per share in cash, about $44 billion total, but he quickly changed his mind. In May, he tweeted that the deal was “temporarily on hold,” and in July he formally terminated the deal. The reason that he gave for terminating the deal was that there were too many bots on Twitter and that Twitter’s management had deceived him about the scale of the bot problem.

This was all, as we discussed extensively at the time, absolute nonsense. “Temporarily on hold,” I wrote, “is not a thing”; signed public-company mergers cannot be put “on hold.” Musk knew all about the bots before signing the deal, Twitter did not lie about them, and the deal was not conditioned on anything at all about bots. Presumably Musk knew all this, though who knows really, and he went ahead and said all the stuff about the bots anyway. What was he up to? I don’t know, but the stock of Tesla Inc. (Musk’s main source of money) went down after the deal was announced, the stocks of social media companies like Twitter also went down, Musk mused publicly that he was overpaying, and he was apparently using the bot nonsense as a lever to renegotiate the price.