Shares of Twitter defied Wednesday’s market sell-off with a sharp rebound that was apparently triggered by a false rumour about a tie-up with News Corp.
The social-networking company’s stock was up 14% to $19.04 at one point in midday trading on Wednesday. Twitter’s stock had been down as much as 7.2% earlier in Wednesday’s session, setting a new low of $15.48.
The spike was apparently due to a rumour that Twitter and News Corp. were close to some kind of tie-up, according to the New York Post — which is owned by News Corp.:
News Corp. was quick to dismiss the rumour. News Corp spokesman James Kennedy told Business Insider that rumours about the media company acquiring or investing in Twitter were both “untrue.” Twitter, for its part, declined to comment.
As the rumour was debunked, Twitter shares gave up much of their gains and finished Wednesday’s regular trading session up roughly 4% at $17.38.
Twitter’s stock has been under pressure for months, as the company struggles to boost user growth. Its plummeting value has sparked constant speculation that Twitter could become an acquisition target.
Wednesday’s wild stock movement sent Twitter’s market cap down to nearly $10 billion and then back up to $13 billion. And combined with the decline in Square shares, it took a toll on the net worth of Jack Dorsey, CEO of Twitter and Square.
Some analysts said that the decline in Twitter’s stock price also encouraged some investors to jump back in.
“You look at a sticker price of $10 billion, you know it’s not natural. it’s clearly a buying opportunity,” said Pivotal Research analyst Brian Wieser.
Indeed, it looks like one big trade in particular may have helped Twitter turn the corner:
Howard Lindzon, CEO of StockTwits, said he wasn’t buying the News Corp. rumour:
The comeback in Twitter’s stock came on a day in which the Dow Jones Industrial Average plunged by more than 500 points, before recovering somewhat and finishing down 249 points at the close of market .
Roughly 69 million shares of Twitter changed hands in frenetic trading on Wednesday, which is more than three times the average three-month trading volume for the stock.