The share prices of Twitter increased by over 8 percent after the circulation of a fake article that claimed that the social media company received a takeover offer worth $31 billion.
The article was published on a website that looked similar to that of Bloomberg's official website and even used a reporter of the news company in the story's byline. The domain of the website, Bloomberg.market, was only registered a few days ago on July 10.
The article claimed that, according to sources with knowledge of the matter, Twitter was working with bankers after receiving a $31 billion takeover offer.
A spokesperson for Bloomberg confirmed that the published story was not one by the news company. A spokesperson for Twitter, on the other hand, declined to issue a comment on the incident.
The usage of falsified news reports and rumors for the manipulation of stock prices has been going on for centuries. However, due to the amount of information that can be accessed today through the Internet, it is difficult for market traders and analysts that are working against time to spot against well-crafted falsifications such as the Twitter takeover hoax.
Carl Quintanilla, an anchor for the CNBC network, reported the fake takeover bid after the first tweet of the story by Twitter user @OpenOutcrier. However, the anchor added that the network was still at the time attempting to determine if the report is legitimate.
Quintanilla tweeted a link to the story, but noted that there were several errors in the article. Ty Trippet, a spokesman for Bloomberg, immediately tweeted to Quintanilla that the article was a hoax, which CNBC quickly reported on air.
Within minutes, the share prices of Twitter which had jumped had gone back to their original levels before the market reaction to the takeover hoax.
The @OpenOutcrier account, which condemned the false story, said that it only looks to provide its followers with rumors and news as quickly as possible. As such, there is little time left to ensure the accuracy of certain news reports.
The incident has pushed the U.S. Securities and Exchange Commission to begin probing for a possible attempt at market manipulation to favor Twitter shares.
Photo: Jurgen Appelo | Flickr