Shares of Twitter Inc. (NYSE:TWTR) spiked more than 7 percent Tuesday morning following a fake report claiming the social media company received a takeover bid for $31 billion. Both Twitter and Bloomberg said the story was fake, Reuters reported.
Twitter shares rose 7.5 percent at 11:45 a.m. EDT to as high as $38.82, but the stock pared gains in afternoon trading, up 3 percent to $36.88.
This isn’t the first time this year that a hoax has sent a company’s stock price briefly higher.
Avon Products Inc. (NYSE:AVP) saw its shares spike 20 percent on May 14 after private equity investment firm PTG Capital Partners Ltd. announced a takeover bid to buy the beauty company for $18.75 a share, the firm said in a filing with the Securities and Exchange Commission.
However, shortly thereafter Avon announced it never received any offer or other communications from such an entity and has not been able to confirm that such an entity exists.
Twitter was the subject of a market mix-up on April 28, when its shares plunged 18 percent less than an hour before the closing bell. The dip came after the social media company’s quarterly earnings were leaked early on its website and shared by financial intelligence service Selerity.
Although Twitter's first-quarter profit beat estimates, revenue and mobile monthly active users both missed forecasts. The company also cut its outlook for 2015.
Twitter is scheduled to report fiscal second-quarter earnings on July 28.
Just last month, Twitter announced that CEO Dick Costolo would step down on July 1 after facing pressure as expectations mounted for the social networking giant to generate high user growth.
Shares of Twitter have lost more than 11 percent of their value since its initial public offering on Nov. 7, 2013. The stock soared more than 70 percent on the first day of trading to close at $44.90 a share, up from the initial pricing of $26 set ahead of its debut.
Evercore ISI downgraded Twitter shares to Hold from Buy in June. The firm also cut Twitter’s price target to $39 per share from $49, expressing concerns about the social media site’s slow user growth.
Twitter shares have declined more than 6 percent in the last 12 months.