Facebook ran into more bad news Friday with a significant stock price drop based on shaky claims of a mass exodus of Instagram users following last week's terms of service debacle.
Shares of Facebook fell 2.84 percent in the first few minutes of trading Friday to $25.31 following the publication of a report in the New York Post that claimed Instagram had lost a quarter of its users since Facebook's startling announcement that it would allow companies to display user names, likenesses and photos in advertisements without compensation to the user.
Facebook has since revised its terms of service for Instagram following popular outcry. Facebook purchased Instagram for $1 billion earlier this year.
But the Post argued that the damage had already been done. Citing numbers from AppData, the article reported that Instagram's active daily users declined from a peak of 16.4 million the week of the Terms of Service announcement to 12.4 million this week.
“[We are] pretty sure the decline in Instagram users was due to the terms of service announcement” an AppData spokesperson told the Post.
However, others aren't quite as sure. Zachary M. Seward of Quartz did not mince words in calling the Post claims "bogus."
The [New York Post] story cites AppData, which tracks usage of Facebook applications like FarmVille. Some users have connected their Instagram and Facebook accounts in a way that would show up in AppData’s metrics, but most have not. So when the Post says, '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,' it’s only talking about a subset of Instagram users.
Even AppData's own metrics make the story of a massive Instagram exodus inconclusive. Monthly active users have increased by 1.7 million in the last seven days and weekly active users rose 2.3 million during the same period. And even the biggest dropoff in daily users didn't occur until nearly a week after the actual Dec. 17 Terms of Service annoucement—after Facebook had already rescinded the offending policy changes.
Chart via AppData
Chart via AppData
AppData did not immediately respond Friday to The Daily Dot's request for an interview. Instagram has not made public its total number of users since the Terms of Service announcement and reversal.
As trading continued Friday, investors were cautiously buying back into Facebook. By 12:30 EST, the price had already climbed to $25.63 a share. It closed the day before at just above $26.
Overall, Facebook stock has been on the rebound lately. Recovering from a highly publicized and disastrous IPO in May, Facebook spent most of the summer and autumn months hovering in the high teens/low twenties, reaching an all time low of $17.72 per share in August. Since about mid-November, Facebook stock has been on the rise, reaching a high of $28.24 on Dec. 13.
Photo by dbctuning/Flickr