Social media titan Facebook Inc (NASDAQ:FB) reported their 4Q 2013 earnings last week, and the numbers were very well received by Wall Street. The earnings report highlighted that mobile ad revenue was growing strongly and the good news propelled Facebook Inc (NASDAQ:FB)’s stock to new all-time highs.
That said, everything is not sunshine and roses for Facebook. Digging deeper into the company’s 10-K filing released over the weekend, however, produced some surprising and potentially alarming statistics about the apparently rapidly growing number of fake Facebook Inc (NASDAQ:FB) accounts.
Up to 137 million fake Facebook accounts
Facebook Inc (NASDAQ:FB)’s 10-K form filed with the SEC revealed that somewhere between 5.5% and 11.2% of user accounts were fraudulent on some level. When you do the math based on 1.23 billion Facebook users, this means that at least 67.65 million fake accounts were active as of December 2013. Assuming the higher 11.2% figure is true, that would mean there were 137.76 million active fraudulent Facebook accounts in December.
Breaking down the numbers
The total figure of 5.5% to 11.2% “fake accounts” is derived from totaling the account statistics below from Facebook Inc (NASDAQ:FB)’s recent filing.
- 4.3 percent to 7.9 percent of accounts were duplicates (meaning someone has created more than one account for an individual), or anywhere between 52.89 million and 97.17 million.
- 0.8 percent to 2.1 percent were misclassified (meaning someone has created an account for something not someone), or anywhere between 9.84 million and 25.83 million.
- 0.4 percent to 1.2 percent were undesirable (meaning accounts created to violate Facebook’s rules), or anywhere between 4.92 million and 14.76 million.
Statistics are only estimates
Facebook Inc (NASDAQ:FB)’s filing emphasized that these fraudulent account statistics are not exact numbers, but just estimates based on internal company data. “The numbers for our key metrics, which include our DAUs, mobile DAUs, MAUs, mobile MAUs, and average revenue per user (ARPU), as well as certain other metrics such as mobile-only DAUs and mobile-only MAUs, are calculated using internal company data based on the activity of user accounts. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world.”