NEW YORK, March 26, 2026, 17:17 (EDT)
Snap Inc. shares tumbled roughly 11% Thursday, scraping a new 52-week low after EU regulators launched a probe into Snapchat’s safeguards for minors—specifically around grooming and illegal goods. The stock dropped to $3.90 at its lowest, before settling at $4.01 by 4:56 p.m. EDT, a near 11% slide on the day. Volume spiked, with more than 104 million shares changing hands.
The decline landed just as investors were reworking their risk calculations on social-media names facing legal and regulatory heat. On Wednesday, a Los Angeles jury found Meta Platforms and Alphabet’s Google negligent—their platform designs, jurors said, hurt young users. What had been mostly a policy fight is now a concrete market concern.
Snap had also faced claims in that same California suit, but reached a settlement with the plaintiff. This week, a separate jury decision in New Mexico against Meta could open the door for the state to push for tougher age verification, cut back on features that draw teens back into apps, and impose curbs on “infinite scroll”—the feature serving up endless new content. The sector now faces a stiffer challenge: design-based allegations are proving harder to dismiss than legal fights over user posts. Reuters
Snap’s running afoul of Brussels this time, with officials invoking the Digital Services Act—a regulation that compels big online platforms to crack down on illegal and harmful content or risk fines reaching 6% of annual worldwide revenue. EU tech chief Henna Virkkunen criticized Snapchat, saying the platform seemed to have ignored what she called the bloc’s “high safety standards for all users.” Reuters
Snap insists it’s continuously tightening its safeguards, noting it engaged with the European Commission “proactively” and “in good faith.” “Investors are repricing legal and regulatory risk after the recent verdicts,” said Adam Sarhan, chief executive at 50 Park Investments. Thursday’s action in Snap shares hinted that this recalibration wasn’t limited to Meta. Reuters
Selling hit the sector. Meta dropped close to 8% as of 4:56 p.m. EDT, while Pinterest slipped around 3.9%. Traders weren’t only worried about Snap—concerns about child-safety and platform design were rattling social-media stocks across the board.
That runs counter to the narrative Snap’s been pushing. Last month, the company posted $1.72 billion in fourth-quarter revenue—a 10% climb from the prior year—and noted a 28% jump in active advertisers. Still, Snap guided for first-quarter revenue between $1.50 billion and $1.53 billion, landing just shy of the $1.55 billion analysts had penciled in. Emarketer’s Max Willens said Snap’s ad platform “still had a long way to go” before it can land the big enterprise dollars. Reuters
Snap’s push to reduce its reliance on advertising has gathered some steam. Back in February, the company reported direct-revenue streams—including subscriptions and in-app purchases—had hit a $1 billion annualized pace, and paid subscribers rose past 25 million. With that, Snap is banking on these lines to take some pressure off ads as it fends off Meta’s Instagram and TikTok.
Gil Luria at D.A. Davidson described the Los Angeles court decision as a “setback” for both Meta and Google. He warned that cases like this could drive new consumer protections, potentially slowing growth. Snap, which dropped on Thursday, now faces a more complicated outlook: investors have to consider the drag from costly compliance in Europe, an uncertain legal environment in the U.S., and an ad business that, according to analysts, still struggles to land major enterprise deals. Reuters
Even so, investigations tend to drag on and often wrap up without blockbuster fines or sudden overhauls. Should Snap manage to convince regulators it doesn’t need drastic fixes, Thursday’s slide might look steeper than whatever comes next. But failure carries real risk: the DSA authorizes steep penalties, and lately, U.S. courts have signaled they’re ready to scrutinize platform design more closely.
Related articles: NASDAQ:SNAP
