This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Is Facebook Lying About 900 Million Users?

Stocks in this article: FB

NEW YORK ( TheStreet) -- I am ceaselessly amazed to witness the level of desperation among some investors when they want nothing more at that particular moment than to be right -- regardless of how ridiculous the claim may be. When it comes to certain companies, I'm realizing that investors these days care very little about exposing their increased levels of emotional attachment. At one point this was a cardinal sin on Wall Street.

However today there is a new breed of investor who wears tickers as badges of honor. In the process, these folks have allowed feelings to cloud their judgment by presenting arguments that not only suggest they are wrong, but demonstrate their commitment toward excluding logic from the discussion. My article on Monday regarding social media giant Facebook (FB) and investors' appetite for revenge stirred a bit of controversy regarding the company's credibility -- specifically questioning the authenticity of its 900 million users.

However, it seems that these are the same people that failed to raise these questions prior to the IPO. Now after getting burned, somehow it is time for due diligence. A reader named "Walrus007" offered this:

I seriously doubt 900 million "people" are using face book. It just doesn't pass the common sense test. I wish the media would stop spreading and ignoring this deception. I repeatedly see blogs from people claiming multiple FB accounts, often up to 50. There are 7B people on earth. For starters, FB is banned or unavailable in many countries including giants like China. I have been to 21 countries and I can tell you that in many countries huge percentages of people are just not on the net at all, and a huge percentage of the world has little or no money to funnel into FB pockets anyway.
I do not believe FB has 900m customers. I also believe they are close to market saturation with all kinds of competitors snapping at their heels. FB will morph into yet another tool for big business to sell you stuff, if it hasn't happened already.

First it's hard to not agree with Walrus007 to some extent because Facebook has recently admitted in SEC documents released prior to its IPO that its user base numbers hold an estimated 5% to 6% of false or duplicate accounts. How accurate that figure is remains to be seen. However, all it means is that instead of 900 million active users, it may (only) have 845 million to 855 million that are real.

Let's assume a more bearish number of 15% unqualified accounts exist, that means the company has (only) 765 million in active users. Is that really that much of a difference?

We could reasonably ask, is Facebook doing enough and does it have sufficient information to report only the accounts that it knows to be legitimate, such as 845 million as opposed to 900 million?

To fully understand how Facebook addresses these concerns one only needs to attempt to create an account of their own -- an exercise which I undertook for the first time recently. What I've noticed is that during the signup process, the company first takes you to what it calls a statement of rights and responsibilities where it states that "Facebook users provide their real names and information, and we need your help to keep it that way" -- information that includes age requirements (13), agreeing not to create duplicate accounts, and not being a convicted sex offender.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs