Will Fake Followers Hurt Twitter and Facebook?

A report came out on the New York Times over the weekend that looked into the practice of buying social media followers for both Twitter Inc (NYSE:TWTR) and Facebook Inc (NASDAQ:FB). A company called Devumi is in the business of selling followers on Twitter and can also have posts automatically retweeted. This allows a person with little influence to appear a lot more popular than they really are.

What’s most fascinating about this is that Devumi is not secretive about its practice at all, and advertises that for just $1,799 you can accumulate 250,000 Twitter followers within four to six months. For just $10, you can obtain as many as 500 followers.

The company does not list Facebook as one of the sites that it sells followers for, but did include a number of other social media sites. However, it is estimated that there are as many as 60 million fake accounts on Facebook.

The big question in all of this is how investors will react to these developments. Initially, Twitter’s stock was up more than 3% on Monday and seemed unaffected by the fact that many “influencers” on the social media site may have been buying their popularity.

Social media sites are often impacted by the number of active users that they have, and we may see more questions raised about fake accounts in future earnings calls. We’ve already seen Snap Inc (NYSE:SNAP) take a beating in its share price after it failed to deliver the growth in users that it promised investors. However, it is still too early to tell what the long-term impacts these developments will have on Twitter and Facebook.