Is Snap’s (SNAP) Lawsuit Over Ad Revenue Disclosures Changing Its Investment Story?

• On August 22, 2025, a shareholder class action lawsuit was filed against Snap Inc., alleging the company made materially false or misleading statements or failed to disclose adverse information about its advertising revenue growth rate.
• This legal action highlights increasing scrutiny over Snap's financial disclosures and could influence regulatory and investor confidence in the company's transparency practices.
• We'll explore how this lawsuit over advertising revenue disclosures could affect Snap's investment narrative and long-term risk profile for investors.

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Snap Investment Narrative Recap

To be a Snap shareholder right now, you need to believe that the company's innovations in augmented reality and its access to a large, engaged audience will eventually translate into sustainable revenue growth, despite persistent unprofitability and intense competition. The shareholder class action lawsuit regarding advertising revenue disclosures may add uncertainty in the near term, but it is not expected to be a material impact on Snap’s most important short-term catalyst: further progress in ad monetization and AR product rollouts. The lawsuit does, however, reinforce legal and regulatory scrutiny as a significant ongoing risk to Snap’s investment case.

One recent event most relevant to the lawsuit is Snap's Q2 2025 earnings announcement, which reported both higher sales and a further increase in net loss. While revenue growth is a positive sign, the continued widening of losses highlights existing concerns around profitability, transparency, and financial management, areas where legal actions around financial disclosures can further dampen investor confidence, especially as the company remains highly reliant on ad revenue to achieve scale.

In contrast, beyond revenue disclosures, investors should also be aware of how Snap’s persistent unprofitability could impact its financial flexibility and future growth attempts...

Read the full narrative on Snap (it's free!)

Snap's outlook projects $7.5 billion in revenue and $811.0 million in earnings by 2028. This scenario assumes 10.0% annual revenue growth and an earnings increase of $1.36 billion from current earnings of -$546.3 million.

Uncover how Snap's forecasts yield a $9.28 fair value, a 30% upside to its current price.

Exploring Other Perspectives

Twelve Simply Wall St Community members provided fair value estimates for Snap spanning US$8.23 to US$18.11. While earnings pressure and legal scrutiny raise fresh questions, you can compare these viewpoints to understand how this debate may affect Snap’s future.

Explore 12 other fair value estimates on Snap - why the stock might be worth just $8.23!

Build Your Own Snap Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Snap research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
• Our free Snap research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Snap's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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