Snap Inc. Faces Class Action for Alleged Misleading Advertising Claims and Revenue Misrepresentation
- Snap Inc. faces a class action lawsuit for allegedly misleading investors about advertising revenue growth and platform effectiveness.
- The lawsuit claims Snap concealed significant drops in revenue, with growth plummeting from 9% to 1% between April and August 2025.
- Investors are encouraged to join the lawsuit to protect their rights, with no costs incurred for participation.
Snap Inc. Faces Class Action Lawsuit Over Alleged Misleading Advertising Claims
Snap Inc. contends with a class action lawsuit filed by The Gross Law Firm and Hagens Berman, which accuses the company of misleading investors regarding its advertising revenue growth and digital advertising platform. The allegations specify that Snap made overly optimistic claims while concealing material adverse facts, particularly concerning a significant drop in advertising revenue growth. The period in question spans from April 29, 2025, to August 5, 2025, during which Snap's growth rate plummets from 9% in the first quarter to just 1% in April, primarily due to execution failures. This downturn becomes starkly evident when Snap discloses its Q2 2025 financial results on August 5, revealing a substantial slowdown that culminates in a sharp 17.15% drop in its stock price.
The lawsuit arises amidst growing scrutiny of Snap's operational challenges, especially regarding its ad platform's effectiveness. The complaint details how Snap allegedly failed to disclose a significant "execution error" related to changes in its advertising platform that negatively impacted its revenue-driving capabilities. Investors who purchased shares during the specified timeframe are encouraged to contact the firms representing the lawsuit to ensure their rights are protected. The firms emphasize that participation in the class action incurs no cost, thus making it accessible for shareholders who have suffered losses due to what they claim are deceptive practices by Snap.
As part of the broader implications for the digital advertising industry, this lawsuit highlights the critical need for transparency and accountability among tech companies. With digital advertising being a cornerstone of revenue for firms like Snap, investors and stakeholders are increasingly vigilant about accurate disclosures. The ongoing investigation by Hagens Berman, led by partner Reed Kathrein, seeks to uncover the extent of Snap's misrepresentations and the impact on its investors. The firm invites those who have experienced losses or possess pertinent information to step forward, indicating a collective effort to hold Snap accountable for its alleged misleading actions.
In addition to the class action, the SEC Whistleblower program offers potential rewards for individuals possessing non-public information regarding Snap's practices. This initiative serves as a mechanism for whistleblowers to contribute to the investigation while protecting their interests. Shareholders and potential whistleblowers are advised to act swiftly, as the deadline for registering for the class action lawsuit is October 20, 2025.