A law firm filed a securities class action suit on Tuesday against Snap Inc., alleging the company made false and misleading statements about its user growth.
Pomerantz LLP, which specializes in such cases, is seeking to represent shareholders in the company which went public just two months ago.
The suit notes that Snap’s stock price plunged $4.93, or 21.45%, after its first quarterly report last week showed disappointing user growth. The suit also cites the claims of Anthony Pompliano, a former growth lead for Snapchat, who has filed his own lawsuit alleging that the company was using inflated metrics during his brief tenure there in 2015.
A Snap Inc. spokesman issued this response: “Lawsuits like this are not uncommon and we are focused on growing our business.”
Snap has rebounded somewhat since its precipitous drop after last week’s report. The stock closed the day on Tuesday at $20.78, up $2.73 a share from its low last Thursday.
The Pomerantz law firm filed a similar suit last year against Twitter, alleging that the company had likewise made misleading statements about its user metrics. That case was subsequently consolidated with a similar case and the firm of Motley Rice was named lead counsel for the plaintiffs. Twitter recently filed a motion to dismiss.