Wall Street plunged in after-hours trading on Wednesday after two global technology companies, according to a publication from internal Reddit, took huge losses from buying shares in an American video game retailer.
GameStop Corp. shares fell about 13 percent to $18.02 in after-hours trading on Wednesday following a report from a tech news website, The Information, that Twitter Inc. and Square Inc. were on the hunt for shares in the store, after hundreds of Redditors complained about how the company treated them. Twitter bought 1 million shares of GameStop and Square purchased about 20 million.
Rumors of the acquisition sent Wall Street into a frenzy, according to The Information, which said the US Securities and Exchange Commission had launched an investigation into the transactions and that Twitter and Square were considering selling shares to the public. Both companies issued statements Wednesday saying that they had taken the losses.
A GameStop spokesperson said in a statement that the Twitter deal is still active, citing a previous statement from Square on its blog.
The Wall Street Journal reported that one of Twitter’s employees sent an email to friends about the deal.
“The staff member’s actions were regrettable and we are reviewing the circumstances,” the company said. “We regret that the purchase of GameStop shares was made public, and we apologize for any financial impact the transaction may have had on GameStop’s shareholders.”
Like the newspaper, The Information said GameStop is not under investigation.
“We did not believe a situation could ever be generated to make the approval of the purchase that company in question was beyond the realm of possibility,” said GameStop spokeswoman Maria Park.