Did Facebook's (FB) Instragram Userbase Really Drop 25%?

Shares of Facebook, Inc. (NASDAQ: FB) are recovering off earlier lows as there are many questions about the reliability of earlier data from AppData, which showed daily active users for Instagram collapsed 25 percent amid the Terms of Use change controversy.

WSJ's Digits Blog notes that the drop may be related to seasonal fluctuation around Christmas and the numbers do not reflect users that created or used accounts that were not connected to Facebook. Other apps like Yelp (Nasdaq: YELP) saw a similar pattern, the blog also noted.

The company also reassured investors that all is ok with their $1 billion dollar purchase. "We continue to see strong and steady growth in both registered and active users of Instagram," the company said in a statement to CNBC.

After trading 3.5 percent earlier, shares of Facebook are now down just 1 percent.

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