×
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

  • Alibaba Buys 8% Stake in Chinese

    Alibaba Buys 8% Stake in Chinese Video Platform Bilibili

    Alibaba has purchased an 8% stake in the Chinese online video platform Bilibili, the official Xinhua news agency reported. Bilibili is one of China’s top video streaming and entertainment platforms, with about 92 million monthly active users and 450 million page-views per day. Founded in 2009, it was listed on the NASDAQ last March. Alibaba’s [...]

  • Clevver-Logo

    Hearst Magazines Buys Clevver's Pop-Culture YouTube Channels After Defy's Demise

    Hearst Magazines has snapped up Clevver, a network of female-skewing lifestyle and pop-culture news YouTube channels that had been owned by now-defunct Defy Media. Clevver was left homeless after Defy’s sudden shutdown in November; its principals said at the time they were looking for a new home. Hearst Magazines sees a digital fit with Clevver’s [...]

  • "Brother" -- Episode 201-- Pictured (l-r):

    CBS Interactive's Marc DeBevoise on Streaming Boom, Content Strategy, and Apple

    Not everyone wants or needs to be Netflix to succeed in the streaming space. And not everyone sees Apple’s enigmatic new service as a threat. Even as rival streaming services offer gobs of content, CBS Interactive’s president and COO Marc DeBevoise sees the company’s targeted original programming strategy continuing to attract viewers to its All [...]

  • Rhett-Link-Good-Mythical-Morning

    Rhett & Link's Mythical Entertainment in Talks to Acquire Smosh (EXCLUSIVE)

    Smosh, the YouTube comedy brand left stranded after parent company Defy Media went belly-up, may be about to get a new business partner. Mythical Entertainment, the entertainment company founded by top YouTube comedy duo Rhett & Link, has been in talks about acquiring the Smosh brand, sources told Variety. Multiple potential buyers came forward to [...]

  • Pokemon Go

    Proposed 'Pokémon Go' Lawsuit Settlement May Remove Poké Stops, Gyms

    A proposed settlement in the class action lawsuit against “Pokémon Go” developer Niantic could remove or change a number of Poké Stops and Gyms in the popular augmented reality game. The proposed settlement was filed in a California court on Thursday and applies to anyone in the U.S. who owns or leases property within 100 meters [...]

  • Skyline of Doha at night with

    Qatar's beIN Rallies Support From U.S. Companies Against Pirate Broadcaster beoutQ

    Qatari powerhouse beIN Media Group has rallied support from American sports and entertainment entities, including Discovery and Fox, behind its request that the U.S. government place Saudi Arabia on its watch list of top intellectual property offenders. The Doha-based broadcaster, a state-owned spinoff of Al Jazeera news network, accuses the Saudi government of harboring pirate broadcaster [...]

More From Our Brands

Access exclusive content