We should all know by now that companies write about themselves in the most glowing and optimistic way, especially in a Securities and Exchange Commission filing. So when Facebook announced it had 845 million active monthly users and 483 actively daily users, people should have been a little skeptical. And just in case you weren't, the New York Times will be skeptical for you.
The Times' Dealbook found on page 44 of Facebook's prospectus information that explained the numbers.
Facebook counts as “active” users who go to its Web site or its mobile site. But it also counts an entire other category of people who don’t click on facebook.com as “active users.” According to the company, a user is considered active if he or she “took an action to share content or activity with his or her Facebook friends or connections via a third-party Web site that is integrated with Facebook.”
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Essentially, if you have ever hit a "Like" on anything outside of Facebook or used your Facebook login to leave a comment on some other website, then you are considered an active user by Facebook. Even if you aren't a daily or monthly user of Facebook, Facebook has just enough fingers in enough pies to make you one of their active users whether you like it or not. Muahahaha!
The story goes on to compare data and suggest the 845 million MAU is about 40 million off.
Are you surprised that Facebook may have inflated numbers? We aren't. When estimating numbers for one's company, it's a rare firm that takes the conservative approach -- especially in an initial public offering. And overestimating by 40 million? Be thankful it's not 400 million.
We doubt that the news will make much of a difference for those eager to invest, but for those hesitating, realize that Facebook may be projecting bigger numbers than it can return.