The reason this is coming out now is that large institutional investors that bought in at $17/share at the IPO are now left with $6/share stock are looking for a way to recoup losses from a bad bet. If Snap had gone up, nobody would have cared about the doctored metrics.
Usage metrics have always seemed extremely unreliable/easy to game from my perspective, but if investors can somehow prove Snap was lying about its metrics, they could win back some $$$. Just not sure how they could prove it - Snap is probably the only company that has full visibility into these numbers and I don't think there's a paper/audit trail like there would be for accounting fraud
Here's a summary of how the whistleblower, Anthony Pompliano (not sure if it's the same guy that incessantly shills for bitcoin on twitter), accused Snapchat of doctoring numbers in 2015: https://www.businessinsider.com/snapchat-unseals-anthony-pom...
The investors will probably try to prove that Snapchat continued to do the same shady user engagement reporting through 2017 when Snap IPOd
This is essentially the game that most VC-backed startups have to play as far as I can tell. Everybody hopes to achieve breakout market dominance before anybody starts to ask questions about what's really true.
Sometimes it works and sometimes it doesn't. In recent years we (i.e. investors) have found out before IPO, but Snap is perhaps a reminder of some of the downsides of the old dot-com bubble.
The "whistleblower" that was fired after 3 weeks on the job back in 2015 was bringing Instagram stories to management's attention? The Instagram stories that came out in 2016?
Was he clairvoyant?
What may have happened is that somehow Snapchat further doctored their numbers after Stories came out to hide the impact it was having on their userbase, then slowly rolled the impact in post IPO leaving the company where it is now, with a sudden slowdown in user growth post IPO and $6 share price down from $24 on first day of trading. same issue of doctored numbers with 2 different timeframes
They have been able to increase revenue per user but still trail Facebook and the growth story pitched at IPO around user growth is the biggest challenge.
With the platform stalling in user numbers increasing revenue per user is only one side of the equation.
The more damning item is really what they knew during the roadshow and how they disclosed it. Obviously Instagram stories has had a material impact on their business and the "whistleblower" was bringing this to management's attention while being shutdown most likely to not derail the momentum of the IPO.
It is quite possible that this may result in fines because there will most likely be a paper trail internally that detailed these issues. Then it's up to a judge to decide if enough disclosure was done.
That's the DOJ/SEC issue as for the ten year plan that's even trickier. Anecdotally Instagram delivers more value to advertisers with actual intent and purchases whole snap is more of an awareness play. But as we've seen with MySpace and Digg even high flying priorities can fizzle out as quickly as they give traction.
In each case a competitor really takes the lions share of the users and it's obvious that in snaps case that is Instagram. And buying a stalled out social platform is a bad play for any company that's serious about building the future.
Given the voting structure I think this will be playing out for a couple of years but at the moment the prospects certainly don't look good and the stock price reflects as much.