Elon Musk testified Wednesday in a San Francisco federal court trial where he faces allegations from Twitter shareholders that he made false and misleading statements to drive down the company's stock price before his $44 billion acquisition in 2022.

The lawsuit was filed in October 2022 on behalf of Twitter shareholders who sold stock between May 13 and October 4, 2022. The plaintiffs claim Musk violated federal securities laws by making public statements "carefully calculated to drive down the price of Twitter stock."

Musk reached a deal to buy Twitter in April 2022, but on May 13 declared the plan "temporarily on hold" pending details about spam and fake accounts on the platform. Twitter's stock price tumbled following the announcement. The lawsuit alleges this statement was false because Twitter had not agreed to put the deal on hold and the merger agreement contained no provision allowing Musk to suspend it.

In the following weeks, Musk continued to raise concerns about fake accounts and bot activity on Twitter. In July 2022, he said he would abandon his offer after claiming the company failed to provide sufficient information about fake accounts. Twitter's stock closed at $36.81 on July 8 when Musk tweeted about abandoning the deal - 32% below his original offer price of $54.20 per share.

The bot issue was not new for Twitter, which had previously paid $809.5 million in 2021 to settle claims about overstating user figures. The company had also disclosed bot estimates to the Securities and Exchange Commission for years while noting the estimates might be low. After Twitter sued to force completion of the deal, Musk offered in October 2022 to proceed with his original proposal, and the acquisition closed later that month.

This marks the second time Musk has faced trial over allegations of misleading investors through social media statements. In 2023, a San Francisco jury cleared him of wrongdoing related to 2018 tweets about taking Tesla private for $420 per share.