Wednesday, September 26, 2012

Facebook Inc (NASDAQ:FB) shares take a dip due to unresolved controversy

Facebook Inc (NASDAQ:FB)’s shares came under another pressure recently, due to the controversy over private messages made public due to a glitch by the site. Facebook has arguably become the most popular social networking site over the last couple of years, and therefore, it has attracted to itself, advertisers, who thrive on the personal information given out by people on the site. The advertisers put up their ads on a person’s homepage based on the location, likes, dislikes, age, and preferences of that person. Therefore, is essential that users feel comfortable in giving out their information to the site.

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However, some users started complaining about the fact that their private messages to other people had been made private over Timeline, a feature which is fast replacing the old Wall of Facebook. The site, however, has denied having slipped. They say that the issues have been caused because people saw really old posts by/for them on the timeline, and they could not believe having written about such private matters in public. This controversy, however, can become dangerous for Facebook, and it is already making its presence felt in terms of dropping shares.

With people becoming more insecure about doling out their private information over Facebook, advertisers and investors are also getting uncomfortable. They too, are shifting in their seats. And experts blame a bug which may have upset the system.

The reports of the problem seem to have mainly come from the U.S and France. The latter has reacted rather strongly to the issue, and has demanded that a Facebook representative answer immediately and explain the situation. Facebook representatives, however, still hold to their explanation, and have been saying that their database confirms that these so-called private messages were indeed public ones, which were posted a long time ago. However, it seems unlikely that so many people, and so many of them in two different countries would suffer a memory lapse around the same time, over the same issue. The shares, meanwhile, are still falling.

Shares of FB had came under heavy selling pressure on Monday and lost about 8% after Barron’s called the stock prices “still too pricey” even after the sharp decline which the prices saw, after the initial opening price.

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