Categories AlphaGraphs, Analysis, Technology

Snap faces investigation over IPO disclosures

Snap Inc. (SNAP) is facing an investigation by the US Department of Justice and the Securities and Exchange Commission over disclosures related to its IPO, as per a report by Reuters.

The agencies subpoenaed the company for details about its IPO, which took place last March, following a lawsuit by shareholders who claim Snap provided misleading information about its rivalry with Facebook’s (FB) subsidiary Instagram.

Snap daily active users quarterly trend

Snap was also accused of not disclosing another lawsuit that cropped up prior to the IPO in which an ex-employee claimed the company misreported user metrics. Snap termed the lawsuit meritless and said it was cooperating with the investigation.

Snap attained a market cap of nearly $30 billion after its stock soared over 40% shortly after its debut. However, the company’s market value has dropped drastically since then and now stands at just over $8.6 billion.

The investors behind the lawsuit have alleged that Snap downplayed its competition with Instagram, whose Stories feature, despite being a copy of Snapchat Stories, has more users than Snap. Facebook has reportedly cloned several of Snapchat’s features for its own service Instagram, and this has impacted Snap’s user growth significantly.

In its most recent quarter, Snap’s daily active users (DAU) grew 5% versus the year-ago period but fell 1% sequentially to 186 million. Snap’s DAU has dropped sequentially over the first three quarters of this year.

Snap content head quits amid turnaround efforts

Losing users to Instagram is not the only problem for Snap. The company has seen a slew of top executives leave this year with the most recent one being its VP of Content Nick Bell. Others include its Chief Financial Officer, Chief Strategy Officer as well as the VPs of Product and Sales, respectively. Snap’s flawed redesign effort also took a toll on its user numbers.

Over the past one month, Snap’s shares have dropped over 8%. As of 2:00 pm ET, the stock was down 4.1%.


Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips.

Most Popular

Thermo Fisher Scientific (TMO) Q4 earnings drop despite higher revenues

Thermo Fisher Scientific Inc. (NYSE: TMO) announced fourth-quarter 2022 financial results, reporting a double-digit fall in adjusted earnings and an increase in revenues. Fourth-quarter revenues increased 7% annually to $11.5

Altria Group (MO) Q4 2022 Earnings: Key financials and quarterly highlights

Altria Group Inc. (NYSE: MO) reported fourth quarter 2022 earnings results today. Net revenues decreased 2.3% year-over-year to $6.1 billion. Net earnings attributable to Altria increased 65.6% to $2.6 billion

AMD Earnings: Advanced Micro Devices Q4 revenue up 16%, profit drops

Semiconductor company Advanced Micro Devices, Inc. (NASDAQ: AMD) reported a decline in fourth-quarter earnings, despite an increase in revenues. Earnings, excluding special items, dropped to $0.69 per share in the

Add Comment
Viewing Highlight