NEW YORK, Jan. 12, 2019 /PRNewswire/ — Pomerantz LLP announces that a class action lawsuit has been filed against Snap, Inc. (“Snap” or the “Company”) (NYSE: SNAP) and certain of its officers. The class action, filed in United States District Court, Central District of California, Western Division, and docketed under 18-cv-09587, is on behalf of a class consisting of investors who purchased or otherwise acquired shares of Snap common stock between March 2, 2017, and August 10, 2017, inclusive (the “Class Period”), including those who purchased Snap common stock traceable to the registration statement and prospectus incorporated therein, issued in connection with the Company's March 3, 2017, IPO Registration Statement. This action asserts violations of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”), as well as SEC Rule 10b-5, promulgated thereunder.
If you are a shareholder who purchased Snap securities or otherwise acquired Snap securities: (1) pursuant and/or traceable to Snap's false and misleading Registration Statement and Prospectus, issued in connection with the Company's initial public offering on or about March 2, 2017 (the “IPO” or the “Offering”); and/or (2) on the open market between March 2, 2017 and August 10, 2017, both dates inclusive (the “Class Period”), you have until January 31, 2019 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW), toll-free, ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
Snap Inc. is a camera company that provides technology and social media services. The Company develops mobile camera application products and services that allow users to send and receive photos, drawings, text, and videos. Snap serves customers worldwide.
On or about March 3, 2017, the Company completed its IPO, issuing 200,000,000 shares and raising net proceeds of approximately $3.91 billion.
Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: Defendants made materially false and misleading statements and failed to disclose material facts concerning: (i) Snap's user growth and engagement, by minimizing the known adverse impact of competition from Instagram's Stories; (ii) the restatement of Snap's 2015 daily user metrics, by failing to disclose Pompliano's detailed, credible allegations regarding Defendants' knowing misrepresentation of its user engagement metrics and severe internal controls deficiencies; and (iii) falsely asserting that Snap did not employ “growth hacking” strategies to inflate user growth.
May 10, 2017, when Snap announced its financial results for the first fiscal quarter of 2017, which revealed disappointing user growth. Snap's first quarterly results as a public company began to reveal to the market that the Exchange Act Defendants had made materially false and misleading statements and omitted material adverse facts about the Company's user growth and the impact of competition from Instagram in the Registration Statement. In a press release issued after the market closed, Snap reported that “DAUs grew from 122 million in Q1 2016 to 166 million in Q1 2017, an increase of 36% year-over-year. DAUs increased 5% quarter-over-quarter, from 158 million in Q4 2016.”
In response to the news of Snap's disappointing user growth Snap's share price declined $4.93 per share, or approximately 21%, from a closing price of $22.98 on May 10, 2017, to close at $18.05 per share on May 11, 2017.
On June 7, 2017, it was reported that, based on data from SensorTower, a firm that tracks app analytics, worldwide downloads of Snapchat for the months of April and May 2017 were down 22% from the year prior, confirming that the image of Snap as a rapidly-growing, soon-to-be profitable business presented in the Registration Statement was just a mirage.
A report issued by Nomura Instinet on this date noted that “By comparison, Instagram downloads have demonstrated YoY growth, suggesting that competitive pressures may be intensifying for Snap, challenging the platform's ability to attract and retain new users.” The report concluded with a reduce rating and a $14 price target on Snap, lowering full-year sales and profit estimates for 2017 and 2018.
On this news, Snap's share price fell approximately 7.4%, from a prior close of $20.36 per share on June 6, 2017, to close at $18.85 per share on June 8, 2017.
On July 11, 2017, Morgan Stanley downgraded its “Buy” position to “equal weight” and lowered its price target by 42% to $16, below the IPO valuation. In support of this about-face, Morgan Stanley bluntly stated: “We have been wrong about SNAP's ability to innovate and improve its ad product this year (improving scalability targeting, measurability, etc.) and user monetization as it works to move beyond ‘experimental' ad budgets into larger branded and direct response ad allocations.” Morgan Stanley's “Bear” case proved for a price of only $7. The report continued that “SNAP's ad product is not evolving/improving as quickly as we expected and Instagram competition is increasing.” The report cited the SensorTower download data, commenting that Morgan Stanley was “lowering [its] forward DAU estimates given this data,” which it viewed as a “troubling directional trend which causes us to lower our DAU outlook.”
On this news, Snap's share price fell $1.52 per share, or approximately 8.9%, from a closing price of $16.99 on July 10, 2017, to close at $15.47 per share on July 11, 2017.
On August 10, 2017, after the market closed, Snap reported its financial results for the second quarter of 2017. In a press release announcing the results, the Company reported that “DAU grew from 143 million in Q2 2016 to 173 million in Q2 2017, an increase of 30.5 million or 21% year-over-year. DAU increased 7.3 million or 4% quarter-over-quarter, from 166 million in Q1 2017.”
In response to Snap's continued disappointing growth in user engagement, Snap's share price declined $1.94 per share, or approximately 14%, from a closing price of $13.77 on August 10, 2017, to close at $11.83 per share on August 11, 2017.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby
SOURCE Pomerantz LLP