Twitter shares surge after fake $31bn buyout offer report

Shares in micro-blogging website Twitter surged as much as 8% on 14 July, after a fake report said the company had received a $31bn (£20bn, €28bn) buyout offer.

Twitter shares traded as high as $38.82 on the day, before closing up 2.63% at $36.72. In after hours, the shares rose again slightly.

Earlier, a story titled "Twitter Attracts Suitors" (which is offline now) appeared on a forged website found at bloomberg.market. The post had the same design as the Bloomberg site and presented the story in a somewhat convincing manner; many investors appeared to have believed it.

The story particularly mentioned the recent fall in Twitter shares, the resignation of CEO Dick Costolo and the speculation about a buyout deal given ill condition of the company in order to make the story convincing.

"Twitter is working closely with bankers after receiving an offer to be bought out for $31bn, people with knowledge of the situation said," the article claimed.

Both Bloomberg and Twitter said the story was fake.

"The story was fake and appeared on a bogus website that was not affiliated with Bloomberg," said Ty Trippet, a Bloomberg spokesman.

The news agency separately reported that the US Securities and Exchange Commission (SEC) was probing possible market manipulation over the fake news article.

The SEC will look into the story's origin and whether the writers who produced it sought to gain financially from the surge in share prices, the news agency said.

Bloomberg noted that the bogus website was registered on 10 July to a post office box in Panama belonging to WhoisGuard Inc.

The development comes as Twitter's share price has been falling from more than $50 to almost $30 following disappointing first quarter results.