Elon Musk has suffered a setback in a legal battle over his tweet about taking Tesla private after a US judge ruled the comments were misleading.
The billionaire has been told no jury would think his tweet was accurate in a ruling that bans his legal team from making that argument in court in May.
Mr Musk claimed he was taking Tesla private in a tweet in 2018 that triggered huge swings in the company’s share price. He tweeted: “Am considering taking Tesla private at $420. Funding secured.”
Tesla shareholders are now suing Mr Musk for fraud over the “indisputably false” tweet and claiming billions in damages.
However, Mr Musk’s lawyers have said the tweet was truthful and that he “was considering taking Tesla private and could have”.
Alex Spiro, one of his lawyers, said: “All that’s left some half-decade later is random plaintiffs’ lawyers trying to make a buck and others trying to block that truth from coming to light all to the detriment of free speech.”
Tesla’s shareholders will only need to show the tweet led to stock market losses if the judge’s latest ruling is left unchallenged.
Mr Musk has already been forced to pay a $20m fine to the Securities and Exchange Commission over the tweet.
He was ordered to put two independent directors on Tesla’s board and must seek legal advice when tweeting information that could be market sensitive.
Mr Musk has since hit out at the SEC and has at times called it the “Shortseller Enrichment Commission”.
JP Morgan is also suing Mr Musk for allegedly breaking a contract with the bank by sending the tweet.
The court case comes as the Tesla founder tries to buy Twitter for $43bn (£35bn).
The company is threatening to block the takeover by flooding the market with cheap shares to dilute his 9pc shareholding and make it harder for him to seize control.
The so-called “poison pill” tactic is designed to stop Mr Musk from buying a 15pc share of the business and launching a hostile takeover.
Mr Musk is now racing to recruit other investors who could each acquire just under 15pc to take majority control.
It is thought that private equity giant Silver Lake Partners could join Mr Musk’s bid for Twitter.
Silver Lake is a large Twitter investor and its co-chief executive, Egon Durban, sits on Twitter’s board.