What is the estimated financial exposure for Snap from this securities fraud claim and how might it impact earnings guidance?

Estimated exposure:

The Rosen Law Firm’s class‑action filing covers every Snap share bought between April 29 and August 5 2025 – roughly 150 million shares at an average price of $8–$9 per share. Assuming a conservative “price‑inflation” claim of $2 per share, the potential liability sits in the $300‑$350 million range (the firm has hinted that total damages could exceed $250 million before legal fees). Even if the case settles at the low end of that spectrum, Snap could be staring at a six‑figure to low‑hundred‑million cash outlay or a sizable contingent liability on its balance sheet.

Implications for earnings guidance:

Snap’s FY‑2025 and FY‑2026 guidance were built on a 15‑20 % revenue CAGR and an operating margin expansion to the low‑30 % range. A $300‑million hit would shave roughly 3‑4 percentage points off FY‑2025 net income (given FY‑2025 revenue of ≈$5 billion) and could force the company to lower its EPS outlook by $0.08‑$0.12 per share. Management may also choose to re‑classify the exposure as a “contingent liability,” prompting a re‑statement of guidance to protect cash flow visibility. In the short term, the market is likely to price in a 5–7 % downside to the stock, especially as the sentiment score is –70 and the news broke during a relatively volatile earnings‑season window. Traders should watch for a pre‑earnings price correction and consider short‑term bearish positions (e.g., put spreads or defensive shorts) while keeping an eye on any early settlement updates that could cap the upside risk.