Snap Inc

Snap is confronting more than 2,500 federal lawsuits alleging its platforms contribute to social media addiction among minors. Snap, Meta, TikTok, and YouTube reached a landmark settlement with the Breathitt County School District, the first multi-platform resolution with a school system, covering claims that social media products strained district resources by contributing to student mental health and discipline issues. The surge in addiction litigation and the Breathitt County settlement push regulatory risk for Snap from background noise into a live operational issue, reinforcing concerns about rising compliance and legal costs and the possibility that future rules constrain product design for younger users. The clearest early tell will be how Snap updates legal disclosures and content safety policies ahead of the February 2027 bellwether trial for school districts, with investors watching for quantified provisions for litigation, new usage controls for teens, and commentary on whether product tweaks are needed to keep SPECS Intelligence and the wider platform compliant as the MDL case count continues to move.

Meta launched three new pairs of smart glasses at its Meta Connect conference on Wednesday, led by its first Meta VR Glasses priced at $1,299. The VR Glasses, on sale in spring 2027, are five times lighter than the Meta Quest 3 headset, feature a 5K display, and house their computing components, battery, and storage in a separate tethered puck; Meta says they are the first-ever IMAX Enhanced-certified VR device, and it is partnering with Disney+ while working to bring Amazon Prime Video and Google's YouTube to the platform, with Microsoft bringing Xbox Cloud Gaming. Meta also unveiled the $349 Ray-Ban Meta Audio glasses, which drop the cameras for a lighter frame and up to 12 hours of battery life, and debuted the $449 third-generation Ray-Ban Meta glasses with longer battery life and improved microphones, alongside an updated line of its own Meta Glasses starting at $249. Meta accounted for 68.7% of global smart glasses shipments in Q2 2026, according to the International Data Corporation, but faces coming competition from Samsung and Google's Android XR glasses this fall and Snap's Specs AR glasses at $2,195, while Apple is rumored to debut its own product in late 2027.

Snap has launched its latest version of Specs, priced at about $2,200, with a more expensive version around $2,400 that does not require Wi-Fi to use, and a new partnership with Verizon to sell them. On Yahoo Finance, Payne Capital Management President Ryan Payne joined Julie Hyman and Jake Conley to debate who the target buyer is and what the real-world use case is for the product. Payne said he does not understand the buyer or the use case outside very specific scenarios, and raised litigation concerns about recording conversations in states where consent is required. The panel noted Snap's stock is down roughly 90% over the last five years and compared the glasses to past products like the stylus and flip phone that failed to win mainstream adoption, while also pointing to Meta's similar efforts. The discussion also touched on the recording feature, with the group noting that wearing such glasses could become socially suspicious.

European Commission President Ursula von der Leyen said the EU will push for social media restrictions for children under 13 years, with a draft proposal set to be introduced on Thursday. The draft will impose strict age restrictions and verification requirements on social media, video-sharing platforms, app stores, online games, AI companions, and conversational AI chatbots, according to Bloomberg. "No social media under the age of 13. No personal account under the age of 15," von der Leyen said in her annual address on Wednesday, adding that the proposed law would allow 13- and 14-year-olds to have accounts with limited features and parental supervision. Companies that fail to meet the requirements could face fines of up to 6% of their annual sales. The bloc's upcoming rules follow Australia's ban last year on social media for children aged under 16, while individual EU member states have also been looking at setting their own restrictions.

California Governor Gavin Newsom signed a new law on Thursday, September 10, barring social media platforms from giving children under 16 access to features that encourage behavioral addiction. The measure is part of 13 laws California has enacted to strengthen protections for children and teenagers against technology-related risks, including protection of minors' personal data online. The new law also expands criminal penalties for child sexual abuse material to cover content that has been digitally altered or generated by AI if it depicts a person under 18 in sexual activity. At the same time, California will ban the manufacture and sale of toys featuring AI companion chatbots for four years, and will require chatbot programs to have parental controls as well as to pass safety and risk assessments. Newsom said this package of measures is among the strictest laws in the United States, and the chatbot law was named Adam's Law in memory of Adam Raine, a 16-year-old who died by suicide in April 2025 after his family said his suicidal thoughts were reinforced by months of conversations with ChatGPT, leading him to act. California, home to major technology companies such as Google, Meta and Snap, is the latest state to tighten restrictions on the social media business amid concerns about service designs that deliberately addict teenagers. However, the law has been opposed by groups that see it as unnecessarily restricting young people's internet access, with the Electronic Frontier Foundation saying the measure is a major nightmare for privacy and freedom of expression. Previously, Utah was the first state to pass a law regulating children's access to social media, before Arkansas, Louisiana, Ohio, Texas, Florida and New York followed with their own measures.

Reddit is leveraging AI and machine learning across its platforms to boost engagement and monetization, with second-quarter 2026 revenues surging 61% year over year to $805 million and advertising revenues up 64% to $762 million. The company's AI-driven Reddit Max suite, now available to all advertisers, has seen adoption rise over 60% sequentially and campaign revenues increase over 150%, with features like tailored creatives delivering results such as Lenovo's 40% higher purchase value. Reddit faces stiff competition from Meta Platforms and Snap, both expanding their AI capabilities in digital advertising. Despite a 35% year-to-date share price decline, Reddit's forward Price/Sales of 6.93X exceeds the sector's 6.09X, and the consensus 2026 earnings estimate of $5.27 per share implies 101.15% growth. Reddit expects third-quarter 2026 revenues of $860-$870 million, indicating continued AI-driven growth.

Australia's government announced proposed laws on Tuesday that would give social media users aged 16 and above the option to reject algorithm-driven content feeds, requiring platforms to offer tools for ongoing choice. Prime Minister Anthony Albanese said platforms must notify users about feed options, allowing them to choose between personalized algorithms or content from followed accounts. The Digital Duty of Care legislation also aims to protect children from harmful content and addictive design features, with penalties up to A$109.2 million ($78.6 million) for non-compliance. This follows Australia's December law banning under-16s from major platforms like Instagram, Facebook, and TikTok, and the online safety watchdog's consideration of court action against several tech firms.

Snap Inc. shares have fallen 7.6% since its second-quarter earnings report, underperforming the S&P 500, but the company reported strong revenue growth and raised guidance. In Q2 2026, Snap's revenues rose 19% year over year to $1.59 billion, beating the Zacks Consensus Estimate by 4.31% and exceeding its own guidance range of $1.52-$1.55 billion. Adjusted EBITDA surged 505% to $250 million, above the high end of its guided range of $175-$200 million, while adjusted earnings per share came in at 6 cents, missing the consensus estimate of 7 cents. Daily active users grew 5% to 493 million, and advertising revenues increased 9% to $1.28 billion, with other revenue jumping 85% to $316 million. For the third quarter, Snap expects revenues between $1.70 and $1.74 billion, implying about 19% growth, and adjusted EBITDA between $300 and $350 million. The company raised its full-year infrastructure cost guidance to $1.65-$1.7 billion, reflecting increased AI investment. Despite the positive results, the consensus estimate has shifted -125% over the past month, and Snap holds a Zacks Rank #3 (Hold).

Snapchat remains unprofitable after 15 years despite reaching 971 million monthly active users, with the stock down over 30% year to date. In the second quarter, the company reported 19% year-over-year revenue growth to $1.6 billion, but still posted a net loss of $164 million, a negative net profit margin of roughly 10%. Snapchat expects adjusted EBITDA of $300 million to $350 million in the third quarter, up from $250 million in the second quarter, and anticipates positive net income in 2027, though a multi-year dilution management program starting that year may offset some benefits. User growth is slowing, with daily active users in North America down 6% year over year and in Europe down 2%, while the U.S. and Europe together account for 81% of revenue, and ARPU outside these regions is only $1 compared to $10.26 in the U.S.

Meta Platforms is strengthening its AI infrastructure with closed-loop liquid cooling across most of its newest AI-optimized data centers, a system that circulates a water-and-glycol coolant through servers and heat exchangers for reuse, cutting ongoing water consumption and enabling higher GPU density. The company also uses reinforcement learning in a pilot that cut air-cooling fan energy by 20% and water use by 4%. These efficiency gains support Meta's broader AI expansion, which includes deploying AI across recommendations and advertising and developing personal and business agents. Meta spent $31.1 billion on capital expenditures in the second quarter of 2026, mainly for servers, data centers, and network infrastructure, and expects full-year 2026 capital expenditures of $130-$145 billion. Meta faces competition from Reddit, which unveiled AI-powered moderation tools in July 2026 that block 23 million spam views daily and cut harmful content exposure by over 40%, and Snap, which is leveraging AI through products like SPECS and Lens+. Meta's shares have lost 13.5% year-to-date, underperforming the Zacks Computer & Technology sector's 15.4% gain, and trade at a forward price-to-sales of 5.05X versus the industry's 3.97X. The Zacks Consensus Estimate for 2026 earnings is $31.90 per share, down 3.30% over the past 30 days, implying 35.80% year-over-year growth, and Meta carries a Zacks Rank #3 (Hold).

Meta Platforms agreed to pay approximately $18 billion over 10 years to settle claims by U.S. attorneys general that Facebook and Instagram were addictive to children, and will introduce stricter safeguards. The company expects to record about $10 billion in legal expenses in the third quarter of 2026, with other guidance unchanged. Of the settlement, 70% or $12.7 billion is guaranteed, while the remaining $5.3 billion depends on TikTok and YouTube adopting comparable protections. The deal leaves Meta's ad-targeting model largely intact, but could increase regulatory scrutiny on rivals like Alphabet and Snap, whose stocks slipped on the news.

PatentVest's new PV Pulse report finds that Apple and Microsoft hold some of the strongest AI-capability patent positions in the AI smart glasses category, despite neither selling a product. Apple's validated portfolio of an estimated 1,550 patent families outranks Google's and Snap's, ranking in the top three across all measured AI capability areas, while Microsoft's AR-rendering portfolio of 409 families nearly ties Meta's 445. Meta holds the largest validated portfolio overall at approximately 1,900 families, and Samsung's widely cited 1,525-family count is misleading, with Samsung Electronics' legitimate glasses-system portfolio closer to 550 families. EssilorLuxottica, Meta's manufacturing partner, holds about 530 validated families, more than XREAL, Xiaomi, and Vuzix combined. The report analyzes 12 companies and is available on PatentVest's insights page.

Meta has reached an agreement with attorneys general from 29 U.S. states to settle lawsuits alleging that Facebook and Instagram made children addicted to social media and harmed their mental health. Meta agreed to pay up to $16.7 billion and to implement additional child protection measures, such as daily time limits, nighttime blocking, age verification, and parental tools. California could receive up to $2.1 billion, while Texas has a separate $1 billion settlement. Some states report a total value of $17.1 billion, including $459 million from the Cambridge Analytica case. Meta states the total payout is approximately $18 billion, paid annually over 10 years. Participating states will receive $12.7 billion, or 70%, with the remaining $5.3 billion contingent on YouTube and TikTok adopting similar measures. Meta will record a $10 billion expense in the third quarter of 2026 after the agreement. Meta shares rose 1%, while Snap fell 8%.

California Attorney General Rob Bonta said the trial, which was in its second week, "did not go well for Meta," after the company reached a historic settlement with dozens of US states over allegations that it designed Instagram and Facebook to hook minors. The settlement, which includes a $17 billion fine, is expected to be implemented over the coming months, and Bonta warned that Meta could be held in contempt of court if it violates the terms. The deal also pressures TikTok, YouTube, and Snap, referred to as "Core Industry Members," to make similar changes to their apps for teens, with Meta's Chief Legal Officer C.J. Mahoney saying the framework will only work if all peers join. Hawaii Attorney General Anne Lopez expressed hope that these companies will "read the writing on the wall" and enter into similar settlements, while experts say the deal sets a precedent that could lead to more legal actions and product changes across the industry. Meta's shares rose 1 percent on Wednesday, and the company, along with YouTube, was earlier found liable in a Los Angeles case and ordered to pay $6 million to a young woman, a decision they intend to appeal.

Meta Platforms agreed to a proposed multistate teen-safety settlement worth up to $17 billion, ending a federal trial that began days ago in Oakland, and its stock rose 1% to $575.60 at midday Wednesday. The settlement resolves allegations that Facebook and Instagram were designed to encourage compulsive use among children and teens, with payments running in annual installments over 10 years and California potentially receiving $1.5 billion to $2.1 billion. Participating states receive 70% of the allocated payment, while the remaining 30%, or $5.3 billion, is released only if YouTube and TikTok implement the same age assurance measures and match that amount. The $17 billion deal is a fraction of the $1.4 trillion in damages Meta said four states could seek, and Meta had booked a $2.4 billion charge related to legal proceedings in Q2 2026. Meanwhile, Snap stock fell 9% to $5.42 after Pennsylvania Attorney General Dave Sunday sued Snapchat over compulsive-use design and risks to minors, and Reddit slid 3% to $156.78 in sympathy, while the Global X Social Media ETF declined 0.7% to $45.28.

Meta has reached a settlement in its social media trial, agreeing to pay up to $16.7 billion, according to Reuters. Bloomberg Intelligence's Mandeep Singh says the payout is not a huge dent for Meta, which generates over $40 billion in free cash flow, but it sets a precedent that could impact the entire social media sector. The settlement may force platforms to change how algorithms show feeds to users under 16, potentially affecting ad impressions and growth. While giants like Alphabet can absorb such costs, smaller platforms like Snapchat and Roblox, which cater to younger demographics, could face a bigger blow. Singh warns that user growth is likely to saturate across social media, and engagement growth could be negatively impacted if remedies are required.

Snap shares fell 3% to $5.24 Monday midday after a federal appeals court ruling stripped the company's Section 230 immunity, opening the door to more than 3,000 consolidated lawsuits. The Ninth Circuit's August 10 decision rejected the legal shield that has historically protected social media platforms from liability over user-generated content, and the ruling sent Snap stock down as much as 12% overnight to $4.74 before buyers stepped in. The lawsuits, brought by states, municipalities, school districts and families, allege Snapchat was deliberately designed to maximize engagement among minors. The legal overhang overshadowed Snap's Q2 2026 revenue beat of $1.6 billion, up 18.9% year over year, and adjusted EBITDA of $249.62 million versus $41.27 million a year earlier. Peers also fell, with Meta Platforms down 3% to $573.9, Reddit down 3% to $173.45, and Pinterest down 4% to $23.2, while the Global X Social Media ETF slipped 1% to $46.11.

Meta Platforms edged about 0.3% higher Friday morning as Australia's under-16 social-media ban intensified scrutiny of its age-verification systems. The company deactivated 462,000 suspected underage Instagram accounts and 294,000 Facebook accounts between December and June, yet government figures show more than eight in 10 users under 16 remained active on social media in the ban's first three months. Australia is moving to double the maximum noncompliance penalty to A$99 million and give regulators more power to gather evidence, while Meta, Google, TikTok and Snap representatives were scheduled to face a parliamentary inquiry Friday. For investors, the bigger concern is whether Australia becomes a regulatory playbook for other countries, potentially raising compliance costs and pressuring engagement among younger users. GuruFocus data as of Aug. 14 values Meta at $597.81 against a GF Value estimate of $836.91, leaving the stock 28.57% below GF Value.

A federal appeals court removed a procedural obstacle facing more than 3,000 lawsuits accusing Meta Platforms, Snap, Alphabet, and TikTok of harming young users through allegedly addictive product features. The Ninth Circuit ruled that Section 230 provides a defense against liability, not immunity from being sued, making Meta and TikTok's appeal premature. The ruling does not decide liability but allows the cases to proceed, with a trial involving 29 state attorneys general scheduled to begin on August 12. Meta faces a combined $942 million in ordered penalties and abatement funding from New Mexico, which it plans to appeal, making the final amount and timing uncertain. The litigation includes approximately 3,300 additional California state cases, and the first bellwether verdict awarded $6 million against Meta and Google.

Major social media companies on the 14th urged the Australian government not to place excessive weight on early data showing that many children are still using their services after the ban on under-16s. Appearing before an Australian Senate hearing were local heads of Google, which operates YouTube, Meta, which operates Facebook and Instagram, Snapchat, and the Chinese short-video app TikTok. Lawmakers cited findings from Australia's internet regulator and others showing that around 80 percent of under-16s were still using social media several months after the ban took effect last December, and asked the companies to explain. Australia's internet regulator, the eSafety Commission, has accused some social media platforms of deliberately delaying compliance and is considering legal action. The hearing is examining proposed amendments that would double the maximum fine to 99 million Australian dollars, or 64 million US dollars, and expand the eSafety Commission's powers to compel platforms and third-party age-verification service providers to produce information and documents during investigations. YouTube's head of government affairs, Rachel Lord, noted that the latest government-published data was as of March, and cautioned against over-reliance on data that is still at a very early stage. Meta's head of public policy for Australia, Mia Garlick, said the data in question may not reflect whether under-16s who claimed to be using the platforms actually held accounts, and that survey data can show a gap between self-reporting and actual behaviour.

Meta Platforms removed 756,000 suspected underage accounts from just before Australia's December ban through June, including 462,000 on Instagram and 294,000 on Facebook, according to Reuters. The removals come as Australia enforces a ban on social-media accounts for anyone under 16, forcing platforms to verify user ages. Meta is using artificial intelligence to read signals from profile activity, reported accounts, and other behavioral clues, while also targeting users who try to sign up again after being removed. Representatives from Meta, TikTok, YouTube, and Snapchat face a parliamentary inquiry on Friday. Australia is moving to double the maximum noncompliance penalty to A$99 million, roughly $69.8 million.

Reddit is strengthening its advertising position against Meta Platforms and Snap, driven by robust financial and user growth. In the second quarter of 2026, Reddit achieved its eighth consecutive quarter of more than 60% revenue growth, with advertising revenues rising 64% year over year to $762 million. The platform now reaches more than 0.5 billion people weekly, including more than 130 million daily users, and new app user retention improved 50% year over year. Reddit's AI-driven ad suite, Reddit Max, saw advertiser usage grow more than 60% from the first quarter, with revenues from Max campaigns increasing by more than 150%. For the third quarter of 2026, management expects revenues between $860 million and $870 million, representing 47% to 49% year-over-year growth.