SEC Snooping Around Snap

Snap Inc.’s March 2017 IPO raised more than $3 billion, and the stock rose from there, for awhile. Now the company is worth less than one-third of its high water valuation of more than $30 billion, its social media app, Snapchat, is bleeding users, it faces a class action lawsuit from investors and word has come that the SEC and the DOJ are investigating investors’ allegations that Snap was less than forthcoming about the realities of competition from Instagram before its IPO. The company has seen several executive departures, weak ad sales and a redesign that users panned. The investors claim Snap failed to disclose a sealed whistle-blower lawsuit by a former employee who claimed inaccuracies in the company’s calculation and reporting of daily active users. Lawyers for Snap claim that investors were well aware of those issues in advance of the IPO, disclosures were accurate and complete and the claims are without merit.