Snap Inc, the company behind Snapchat, is facing a securities class action suit which alleges it made “false” and “misleading” claims about user growth.
“Pomerantz LLP, which specializes in such cases, is seeking to represent shareholders in the company which went public just two months ago,” reported Variety on Tuesday. “The suit notes that Snap’s stock price plunged $4.93, or 21.45%, after its first quarterly report last week showed disappointing user growth. The suit also cites the claims of Anthony Pompliano, a former growth lead for Snapchat, who has filed his own lawsuit alleging that the company was using inflated metrics during his brief tenure there in 2015.”
Though the Pomerantz law firm has filed similar suits in the past, most notably against Twitter for the same reason last year, a Snap Inc. spokesman blew off the incident in a statement, saying, “Lawsuits like this are not uncommon and we are focused on growing our business.”
In March, Snapchat was discovered to be the most important social network among millennials during a survey.
According to the report released by LendEdu, 58 percent of university students stated that they open Snapchat first when checking social media.
This was followed by 27 percent who claimed to check Instagram first, while 13 percent chose Facebook.
That month it was also reported that Snapchat would likely become more popular with advertisers than Twitter, Yahoo, and AOL by 2020.