In the brave, new world of social media, corporate leaders increasingly disseminate pertinent information to stakeholders via tweets and blogs. Judiciously employed, social media has obvious benefits; yet, used imprudently, tweets and the like can easily ensnare businesses in costly lawsuits. The truth of the latter point was recently proven by In re Tesla, Inc. Securities Litigation, ___ F.Supp.3d ___ (No. 18-cv-04865) (N. D. Cal. April 15, 2020), where shareholders alleged a variety of federal securities code violations stemming from a controversial outburst of tweets from the automaker’s CEO. Given that any publicly held corporation is susceptible to litigation of this sort any time its executives go on social media, this decision is worthy of our attention.

Social Media and the CEO

A bit of history aids our analysis. Elon Musk, Tesla’s co-founder, current CEO, and former chair, has long had an acrimonious relationship with the “short sellers,” investors who have essentially gambled that the company’s share price shall decline. Those shorting the stock have, at various times, controlled as much as one-quarter of the corporation’s outstanding shares, and Musk’s hostility toward these pessimists is well documented.