Thursday, August 2, 2012

Facebook Inc (FB) Shares Dip Further on Disclosures about Fake Accounts

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.

What Technical Charts are Suggesting About FB. Get Free Trend Analysis

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.

How Should Investors Play FB Safely, Find In Our Free Report

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.


  1. Interesting. Compare the 1 month chart for FB and GS.

  2. I guess Facebook attracts Suckerbergs to buy there stocks

  3. Facebook has been artificially inflating its numbers for some time. Look at your friends list and count the actual profiles which are listed there. Now compare it to the number which Facebook displays above your friends list. You will see that the Facebook number is far higher than the actual number of friends which you have. I know people who have as many as 500+ more people listed by this Facebook number than are actually listed on their friend list. Where investors are concerned, it smells like FRAUD.

  4. It's not just for nefarious purposes. A lot of FB app developers have dozens of fake accounts for testing purposes.


Privacy Policy | Legal Disclaimer