Shares of Snap (SNAP) are trading lower at the time of writing after New Mexico Attorney General Raúl Torrez filed a lawsuit against the social media company, which accuses the firm of making it easy for child predators to exploit kids through its design and policies. Indeed, an undercover investigation found that Snapchat’s features allow predators to target children for sextortion and share illegal content despite users mistakenly believing that their photos and videos disappear. In reality, according to the lawsuit, predators can actually save and trade them permanently.
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The lawsuit points out that Snapchat has become a hotspot for sextortion and child sexual abuse material, with over 10,000 stolen images and videos, many involving minors, found on dark websites. In addition, the investigation revealed Snapchat’s recommendation system helps connect users involved in illegal activities, which further puts young people on the platform in danger.
Snap is also accused of misleading the public about its safety features. An example of this is a Super Bowl ad that claimed the platform is “more private” than others. The New Mexico DOJ took similar legal action against Meta (META) earlier this year and successfully advanced a lawsuit that alleges the platform enables child sexual exploitation.
Is Snap a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on SNAP stock based on eight Buys, 19 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 48% year-to-date decline, the average SNAP price target of $15.59 per share implies 77.56% upside potential.
