Snap sued, accused of faking growth by ex-employee

January 5, 2017

Less than two months after Snap filed for its highly anticipated IPO, the company behind the ephemeral photo-sharing app Snapchat has been sued for allegedly inflating its growth metrics.

Anthony Pompliano, who was head of the company’s growth team for three weeks in the summer of 2015, has filed a lawsuit claiming Snap lured him away from Facebook by lying about key growth numbers, then fired him after he confronted executives with his concerns.

The lawsuit claims that the root cause of Snap's alleged falsifications was a desire to boost the company’s value for its upcoming IPO. In November, the messaging company filed confidentially for its public offering, confirming rumors that had swirled around Silicon Valley for months. Snapchat will reportedly seek a valuation of between $20 billion and $25 billion with its offering, a number not far off from the reported $20 billion valuation it secured in May with a $1.8 billion fundraising.

A Snap spokesperson refuted the allegations put forth in the suit. "It has no merit," spokeswoman Mary Ritti told Variety. "It is totally made up by a disgruntled former employee."

Snap isn't the only tech darling to be accused of some sleight of hand in reporting its metrics. It was revealed in September that Facebook (NASDAQ: FB)—Snapchat’s biggest rival and Pompliano’s previous employer—had been inflating its reported average video view time for years. A few months later, the social media giant announced it was correcting several additional issues so as not to exaggerate audience engagement with ads, live video reaction counts and use of the “like” and “share” buttons. Facebook’s share price took a minor tumble in the fallout, but the company's stock has since begun to bounce back.

Snap, meanwhile, could hit the public markets as soon as March—if all goes according to plan. And with this lawsuit, it appears there actually may be an “if" to contend with.

Read more of our Snap coverage here. Get more key company details in its public profile.

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