Facebook Inc’s (NASDAQ:FB) woes are never-ending. Its already battered stock got hammered further on Thursday as information emerged that about a tenth of its accounts could be fake.
There have been rumblings earlier too about fake accounts on Facebook, but this time in a filing with the U.S. Securities Exchange Commission the company admitted that as many as 83 million of its accounts were fakes with up to 5 percent of its users having duplicate accounts.
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The world's largest social network's claims of having more than 900 million subscribers has often been questioned by analysts including the authenticity and veracity of those accounts and how many of them were really active and engaged on the network.
Facebook shares swung to fresh lows dipping to as low as $19.82 during intra-day trades before closing at $20.04. With Thursday's activity, the stock has depreciated nearly half in value from its stock market debut price of $38 a share on May 18th.
In its filing with the SEC, Facebook said, ""While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world."
Its investors and backers have been left red-faced by its poor run in the stock market, all of which now seem to be the result of inflated valuation and too-optimistic estimates of its revenues.
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Its quarterly numbers to June showed that the company, whose user base grew exponentially since 2008, when membership was thrown open to non-students has not been able to adequately monetise its subscribers.
The troubles with its stock started right at its debut when a huge collapse in its share price on the first day of trading and regulators launched investigations into allegations of insider trading.
The company and its bankers (to the issue) have already been sued by investors for that debacle amidst suspicion that many were in the know about its shaky mobile business and its struggle to make money on mobile platforms.
Facebook's advertising revenues grew 32 percent in the June quarter, compared to 45 percent in the previous sequential quarter.