Twitter shares jumped 8 percent on Tuesday after a fake Bloomberg News report claiming that the social network received a $31 billion takeover offer appeared on the hoax website bloomberg.market.
Bloomberg Business, which uses bloomberg.com for its news service, was quick to dismiss the article as a fake via Twitter through a Bloomberg spokesperson, Ty Trippet.
— Ty Trippet (@ttrippet) July 14, 2015
Mr. Trippet also tweeted at CNBC news anchor Carl Quintanilla as he cited the fake report live on the air. Mr. Quintanilla quickly dismissed the authenticity of the news release and even pointed out some mistakes, in particular that Twitter’s former CEO Dick Costolo’s name was misspelled.
Several other financial business news outlets took the bait and Twitter’s upward stock price swing lasted for about 10 minutes following the fake report which was released at 11:36 a.m. EDT. Shares then went back to $36.38, where they were before the false report was circulated.
According to the New York Times, the faux takeover bid report was convincing in part because “Twitter has been a popular target for speculation about a takeover in recent months.” The company’s board is currently searching for a chief executive to replace Mr. Costolo, who stepped down in early July.
Stock price manipulation is illegal. In June the Securities and Exchange Commission (SEC) filed a lawsuit against a handful of companies for trying to manipulate Avon Products, Inc. stock price for short-term financial gain.
According to the Wall Street Journal, a Twitter spokesperson declined to comment on the story.
Twitter has not issued an official statement or tweet on the company’s website or Twitter feeds.
According to the New York Times, Evan Williams, Twitter’s co-founder and board member, had a rather cavalier response to the fake article and subsequent stock price movement when asked about it on Tuesday, as he attended Fortune’s Brainstorm Tech conference in Aspen, Colo.
“There’s probably all kinds of legal things I have to know in order to answer that question properly, so I’m just going to say that, as I said before, there is incredible potential in Twitter and blah blah blah … the board will do what it’s supposed to do,” Mr. Williams said.
The SEC did not confirm whether it was investigating the source of the hoax.
Mr. Williams response to this story is an affirmation that Twitter does not only lack a corporate strategy but also a PR and investor relations (IR) strategy.
What kind of serious answer should ever include the words “blah, blah, blah”?
Twitter is no position to pass such an opportunity to reassure its investors of the company’s commitment to its shareholders.
This response is particularly disturbing coming from a high level executive, who is a co-founder and board member.
As a shareholder, I would expect Twitter to take any stock moving story seriously, even fake ones, and to at least make a passing mention that there will be an investigation on the matter. Even if the investigation comes up empty.
One news article said that Mr. Williams got a few laughs with his quip.
If that is Twitter’s IR strategy, then Mr. Williams deserves a standing ovation and I stand corrected.