Snap Inc.

Case Details

Class Period: February 5, 2021 - October 21, 2021
Date Filed: November 11, 2021
Case Number: 2:21-cv-8892
Jurisdiction: Central District of California
icon-casetype Case Type: Securities Case

Case Summary

The action asserts claims for violations of the Securities Exchange Act of 1934 against Snap Inc. (“Snap”) and certain of its senior executives (together, “Defendants”). The action alleges that defendants made materially false and/or misleading statements and failed to disclose material facts about Snap’s business, operations, and prospects on behalf of all persons or entities that purchased Snap common stock between February 5, 2021 and October 21, 2021, inclusive (the “Class Period”).

Snap, which calls itself a camera company, is known for the social media application Snapchat and associated products and advertisements. Snap derives the vast majority of its revenues from its advertising products on Snapchat. As part of an ongoing privacy push, in June 2020, Apple Inc. (“Apple”) publicly announced new data privacy features for its iOS mobile operating system used on iPhones that affected the tracking of user data—a key metric for Snap’s advertising business. After several delays, in April 2021, Apple released the new data privacy features for iOS.

The class action alleges that, during the Class Period, Defendants made false and misleading statements and/or failed to disclose that Apple’s privacy changes were having a material impact on the Company’s advertising business and that Snap had overstated its ability to transition its advertising with Apple’s privacy changes. The truth emerged on October 22, 2021, when Snap filed its financial results for the third quarter of 2021 with the U.S. Securities and Exchange Commission, which included weaker-than-expected revenue and weaker-than-expected guidance for the fourth quarter. Snap attributed the disappointing outlook to declines in Snap’s advertising business, including due to Apple’s privacy changes. The filing acknowledged that Apple’s changes had adversely affected Snap’s ability to measure the effectiveness of advertisements on its platforms and would reduce demand and pricing for Snap’s advertising products. In response to these revelations, Snap’s stock price fell $19.97 per share, or 26 percent, to close at $55.41 per share on October 22, 2021.

On January 31, 2022, the Court appointed Oklahoma Firefighters Pension and Retirement System as Lead Plaintiff and Saxena White as Lead Counsel in this action.

On March 18, 2022, Lead Plaintiff filed its consolidated complaint. Defendants then filed their motion to dismiss the consolidated complaint on May 3, 2022. While briefing was underway, Lead Plaintiff requested leave to file a second amended complaint, which it filed on August 3, 2022 under seal. Defendants in turn filed a motion to dismiss the second amended complaint on September 19, 2022. Briefing of this motion to dismiss ended on December 1, 2022, and the Court has set a hearing on the motion for March 13, 2023.