Facebook shares drop on news of fake accounts
83 million accounts false or duplicates, company reveals
Facebook shares fell to new lows Thursday, dropping four per cent to close at $20.04 US on the Nasdaq as the company revealed that as many as 83 million accounts on its social networking website might be false or duplicate user profiles.
The company said in a regulatory filing this week that 8.7 per cent of its 955 million monthly active users may be duplicate or false accounts. In May, it estimated that five to six per cent were such accounts.
Facebook Inc. said that about 4.8 per cent of its active user accounts may have been duplicates as of June 30 while misclassified accounts likely represented about 2.4 per cent of the total. These are accounts for pets or businesses that people set up as they would set up a human user's profile.
Accounts that Facebook terms "undesirable," such as those used for spamming, represent about 1.5 per cent of the total.
The news was another blow to Facebook's stock, which is getting closer to losing half of its value since its highly anticipated public offering on May 18.
Another five per cent decline from Thursday's close would bring it to $19 — half of its initial offering price of $38. The stock traded as low as $19.82 during Thursday's session.
The stock has been falling since Facebook released quarterly earnings last week for the first time as a public company. Investors were disappointed despite second-quarter results meeting Wall Street expectations, with revenue one-third higher than last year.
Since Facebook began trading publicly in mid-May, investors have been concerned about its ability to keep increasing revenue and make money from its growing mobile audience. Many analysts hold positive long-term views.