Snap faces probe from US regulators amid accusations it misled investors
US regulators have triggered an investigation into Snap's disclosures to investors ahead of its 2017 initial public offering.
The US Justice Department and the Securities and Exchange Commission sent subpoenas and requests for information to Snap in a sealed filing last Wednesday, a spokesman confirmed.
This investigation follows a legal battle brought by Snap shareholders last year, who claimed that they had been misled about how competition from Facebook and Instagram had affected the growth of the company.
The company lost $2bn in value in the first quarter after listing in New York, triggering the class action lawsuit.
Snap said it believes that the federal regulators "are investigating issues related to the previously disclosed allegations asserted in the class action about our IPO disclosures".
Snap has claimed that the lawsuit against it is "baseless". The company's motion to dismiss the case was denied in June of this year.
Meanwhile, the string of executive exits at the top of the business continued this week as Snap's head of content Nick Bell stepped down after five years.
Bell, who was responsible for driving original video and shows on Snapchat, is exiting by the end of this year.
He follows chief strategy officer Imran Khan who left in September, and vice president and global head of sales Jeff Lucas and Snap vice president of product Tom Conrad, who both left during the aftermath of a disastrous redesign of the Snapchat app earlier this year.
Last month, Snap filed its second successive decline in popularity, falling from 188 million in the three months ending in June to 186 million by the end of September. In total, the photo-sharing app lost five million users in the last six months.
In a conference call with analysts, chief executive Evan Spiegel said that he planned to restore Snapchat's user growth by targeting users over the age of 34, who rarely use it at present, and people in the developing world.
The company has already invested in a dozen of original shows in a bid to win back users, all shot vertically to be watched on a smartphone. The hope is that these shows will help the app tighten its grip on the existing teenage audience and grant it a competitive edge over Facebook and Instagram.
