A fake news story fooled traders Tuesday into gobbling Twitter shares up, causing the tech company's stocks to spike by more than eight percent.
Masquerading as the media organization Bloomberg, the site reported a $31-billion acquisition bid for Twitter Inc. Using a real name of a Bloomberg reporter in the byline, it claimed, that the popular social network was "working closely with bankers after receiving an offer to be bought out."
The story fueled the excitement further when it alluded to Google as the potential party to the buyout. It was published at 11:36 a.m., and Twitter's stock price immediately rallied just minutes later. Even large media organizations carried the story, such as CNBC, which was reported to have cited and tweeted the bid story on-air, according to the Wall Street Journal.
The uptick lasted for several minutes, with overall options activity jumping to at least 330,000 contracts before people started spotting the error, Yahoo Finance reported.
Bloomberg spokesperson Ty Trippet immediately drew attention to the fake news story, confirming doubts raised earlier by CNBC anchor Carl Quintanilla. Twitter also released a statement confirming the hoax.
Authorities are still unsure about the identity of the website publisher. The site itself, which has since been taken down, used BloombergBusiness as its logo and the bloomberg.market domain name. It also cleverly copied the design of Bloomberg website down to its color scheme. The Verge explained that the fraudulent story is part of the so-called "pump and dump" tactic, where an investor releases bad information to take advantage of the changes to the stock price. In this case, the instigator sells his Twitter stocks, profiting from the brief price increase.
The website itself was only registered this week in Panama and hid behind a fictitious firm called WholsGuard, Reuters learned. This is the second incident this year involving a fake story, as a fraudulent takeover report also sent Avon's stock surging last May.
