clock menu more-arrow no yes

Twitter Stock Jumps Nearly 8 Percent on Fake Bloomberg News Post

Fake news leads to stock spike.

This is a real story, but a fake one caused Twitter’s stock to surge nearly 8 percent. The bogus report, headlined “Twitter Attracts Suitors” and attributed to Bloomberg News, said Twitter had received a $31 billion buyout offer, a clever ploy to goose the company’s shares.

The stock dropped soon after but was still trading about 3 percent higher from yesterday’s close.

The hoax was artfully deployed, appearing on a forged website found at bloomberg.market with a post designed to look exactly like a Bloomberg article*. The fake news story keyed into one possible scenario for the troubled tech company, causing some investors to believe it had received an actual buyout bid.** Twitter’s current market value is just under $25 billion.

Dick Costolo recently stepped down as CEO after spending a difficult year trying to convince Wall Street the company was gaining enough users. In addition, Twitter’s ad performance took a dip after it altered pricing on some of its ad units, and some investors have criticized the company for failing to roll out new products fast enough. Founder Jack Dorsey has taken over in the interim as the board looks for a new CEO.

Twitter declined to comment, while Bloomberg News tweeted:

https://twitter.com/business/status/620992119000420352

Update: Bloomberg News reports the Securities and Exchange Commission is looking into possible criminal activity, citing anonymous sources, which is hardly surprising given this was such a brazen ruse.

* Keen-eyed media observers and students of Bloomberg’s many wonky decrees would’ve easily spotted the counterfeit content. Bloomberg News would never run such a fuzzy headline, especially one based on anonymous sourcing. Readers would’ve been better fooled by something like: “Twitter Is Said To Hire Advisors on Possible Sale.” The name of former CEO Dick Costolo was misspelled. Corrections are like little nicks of death at Bloomberg, so a big no-no. The lead sentence doesn’t immediately describe what Twitter is (a social media company) or its context (that has struggled lately). Finally, no nut graph, or what-does-this-all-mean explanation. (Disclosure: I used to be the media reporter for Bloomberg News.)

** In truth, when stocks trade that heavily that quickly, it’s traders’ algorithms executing those buy and sell orders. High-frequency traders employ bots that parse headlines for any m&a activity in order to make a trade within microseconds. It often requires a human being to look after the fact to calm things back down.

This article originally appeared on Recode.net.

Sign up for the newsletter The Weeds

Understand how policy impacts people. Delivered Fridays.