The stock spiked nearly 8 percent initially after the story at bloomberg.market, rather than bloomberg.com, claimed Twitter was working with banks after receiving a $31 billion takeover bid. Both Bloomberg and Twitter denied the report was true.
Investors jumped on the initial report as takeover speculation has swirled around the company in recent months. The fake story follows a false acquisition offer that sent Avon shares soaring earlier this year.
The bloomberg.market domain was registered on Friday by an individual who listed an address in Panama, according to ICANN, which oversees Internet domain databases.
The Securities and Exchange Commission declined to comment on whether it is investigating the takeover report.
Twitter shares gave up some of the gains after Bloomberg said the report was false, but held more than 3 percent higher into Tuesday afternoon.
— Reuters contributed to this report