×
You will be redirected back to your article in seconds

Snap Stock Slips on Disclosure of Regulatory Probe Into IPO

UPDATED, 4:05 p.m. ET: Shares of Snap, parent company of Snapchat, fell 3.4% in regular trading Wednesday after the company said the Justice Department and the SEC are investigating whether it misled investors leading up to its initial public offering last year.

On Tuesday, Snap said it had been subpoenaed by the U.S. regulatory agencies in inquiries related to a federal class-action lawsuit alleging the company failed to disclose the extent to which Facebook’s Instagram app had impacted growth of the Snapchat user base and that it didn’t reveal info in a whistleblower claim filed in January 2017 by a former employee who alleged Snap had falsified user-growth metrics.

“It is our understanding that these regulators are investigating issues related to the previously disclosed allegations asserted in the class action about our IPO disclosures,” the company said in a statement. “While we do not have complete visibility into these investigations, our understanding is that the DOJ is likely focused on IPO disclosures relating to competition from Instagram.”

Snap reiterated its position that the class-action lawsuit is without merit and that “our IPO disclosures were accurate and complete.”

Since Snap’s March 2017 IPO, the stock price has fallen around 76%. The stock closed Wednesday at $6.48 per share, down from its peak of $27.09 on March 3, 2017, after NBCUniversal said it had invested $500 million in the company.

Investors have grown bearish on Snap amid slowing user growth and concerns that it will need more capital going into 2019. For the third quarter of 2018, Snap lost 2 million daily active users compared with the previous quarter, down 1% sequentially, to stand at an average of 186 million for the period.

Snap also has seen a shakeup in its executive ranks, including the recent departures of VP of content Nick Bellchief strategy officer Imran Khan, and VP of marketing Steve LaBella.

More Digital

  • THE UMBRELLA ACADEMY

    'The Umbrella Academy' Superheroes Series Premiere Date Set on Netflix

    The dysfunctional-family superheroes of “The Umbrella Academy” are landing on Netflix worldwide on Feb. 15, 2019. The live-action series is based on the “Umbrella Academy” comic books created and written by Gerard Way and illustrated by Gabriel Bá, published by Dark Horse Comics. The Netflix original series comprises 10 one-hour episodes. “The Umbrella Academy” stars [...]

  • ATF: Hooq Adds Trio of Original

    ATF: Hooq Adds Trio of Original Series, Partnership With Vice Media

    Asian video-on-demand service, Hooq has unveiled three Indonesian-made original series, and a partnership with online content group Vice. The new shows range from a talk show “TL;DR” that will be co-produced with Vice, to a full-length series, “Check Out The Store Next Door” (“Cek Toko Sebelah the Series”) and a short form series. The partnership [...]

  • ATF: Indian Streamer Eros Now Launches

    ATF: Indian Streamer Eros Now Launches 'Flesh' as Original Series

    Eros Now, the video streaming arm of Indian film production and distribution giant Eros International, has begun production of an original web TV series. Its human trafficking drama “Flesh” will air in early 2019. “Flesh” stars Swara Bhaskar (“Raanjhanaa,” “Veera Di Wedding”) as a belligerent female cop who takes matters into her own hands in [...]

  • Avengers End Game Trailer

    'Avengers: Endgame' Trailer Smashes 24-Hour Video Views Record

    With the Marvel fandom’s anticipation leading up to “Avengers: Endgame,” it’s no surprise that the trailer drop set a new record for most views in its first 24 hours. The “Avengers: Endgame” trailer was viewed 289 million times in its first 24 hours, after it was released around 5 a.m. PT Friday, according to Marvel [...]

  • ESL And Oculus Partner For VR

    ESL And Oculus Partner For VR Charity Challenge Game Show

    Esports company ESL is teaming up with Oculus for the Change the Game VR Charity Challenge (VRCC), it announced on Friday. Two teams of influencers will compete for a $100,000 prize during the event. Each will represent one of two gaming charities — Stack Up or Take This. Stack Up is a nonprofit that works [...]

More From Our Brands

Access exclusive content