Did a Misunderstood Report Cause Facebook Inc (FB) to Fall This Morning?

Page 1 of 2

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 (FB)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?

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!