Facebook Inc (NASDAQ:FB)‘s stock price has been booming over the past three months, up almost 20% at the time of this writing. With no earth-shattering news releases on the docket for today, it was likely a surprise to early-morning traders that shares of the social media giant were down as much as 2.9% in the market’s first few hours.
Facebook Inc (NASDAQ:FB) has since recovered most of its losses on the day, but it’s absolutely essential that we delve into the details of why this drop may have occurred.
Originally reported by Quartz, which is known for its typically insightful commentary, the moderate selloff may have been the result of an article in the New York Post concerning research from AppData. In the original piece, AppData is said to have found that the user base of “Instagram, which peaked at 16.4 million active daily users the week it rolled out its policy change, had fallen to 12.4 million as of yesterday.”
Now, the Post was quick to claim that this means Facebook Inc (NASDAQ:FB)’s Instagram “may have shed nearly a quarter of its daily active users in the wake of the [terms of service] debacle,” with AppData cited as saying “[We are] pretty sure the decline in Instagram users was due to the terms of service announcement.”
As Quartz so ardently points out though, this data set is “only talking about a subset of Instagram users,” adding that it “might be representative, but it might not. The claim that Instagram has lost a quarter of its users isn’t supported by this data.” The critique also mentioned that the declines didn’t occur until December 23rd, a full week after Facebook Inc (NASDAQ:FB) and Instagram’s TOS announcement.
So what else is wrong with this picture?