The 7 Ugly Truths About Facebook | The Exchange – Yahoo! Finance.
Zuckerberg Facebook Collapse Crash and Burn
More proof that the Ship is Sinking fast.
1. It has a problem with fake accounts
ccording to a regulatory filing released earlier this week, Facebook itself estimates that as many as 8.7 percent of its 955 million worldwide active accounts are in fact duplicates or fakes, accounting for some 83 million “users.
“These estimates are based on an internal review of a limited sample of accounts,” the company said in its SEC filing, “and we apply significant judgment in making this determination, such as identifying names that appear to be fake or other behavior that appears inauthentic to the reviewers.”
2. Bots may be gaming its advertising
A startup called Limited Run has stopped advertising on Facebook and recently went public about its experiences with the company, saying that as many as 80 percent of the clicks it received on its Facebook ads appeared to be from “bots” (web robots) and not real people. The allegation implies that Facebook is juicing its click rate to overcharge its advertising clients and give the appearance of increased traffic.
3. Its revenues aren’t that great
Despite all outward appearances (the 955 million users, the splashy IPO, the globetrotting CEO), Facebook isn’t exactly raking in the cash when compared to other Internet firms. In fact, PaidContentrecently released
a list of 10 Web companies that are doing better than Facebook in the revenue department.
4. Its stock price won’t stop falling
Facebook’s IPO was priced at $38 a share on May 17 and has pretty much sunk like a stone ever since, recently slipping
under $20 a share for the first time, a 45 percent drop. What happened?
5. Executives are leaving
As happens just about any time a startup goes public — early employees stick around through the IPO, cash out and then move on to new things. At Facebook, however, several high-profile recent defections
have raised questions about the company’s leadership and its prospects going forward.
6. Its reputation is suffering
It seems like a lifetime ago that Facebook was the hot, new startup that engineers were begging to work at (even competing in coding competitions to earn coveted internship spots, if 2010 film “The Social Network” is to be believed). But that glitter has faded post-IPO and, although Facebook remains a force in Silicon Valley hiring, it is starting to run into opposition for the first time in its brief history.
7. Insiders are selling their stock
More than a few Facebook insiders dumped their stock
on the IPO, making millions in the process. That fact alone was not surprising; many of these folks had been waiting for years to cash in on their investments.
But when an IPO goes as badly as Facebook’s did, having a group of investors and senior executives sell their stock at or near the peak price does tend to discourage other buyers. Overall, Facebook’s insiders sold $9.8 billion worth of stock at the IPO, accounting for some 241 million shares, with CEO Mark Zuckerberg taking home a cool $1.14 billion and early Facebook investors Accel Partners selling 57.7 million shares for $2.1 billion.