Appeals Court Clears Thousands of Youth-Safety Suits Against Snap

A U.S. appeals court has cleared roughly 2,400 to 3,000 lawsuits to proceed against Snap and other social media companies over claims that their platforms were designed to be addictive to young users. The ruling removes a procedural barrier that had held the consolidated litigation in place and shifts the cases toward discovery, extending a legal overhang that analysts have flagged as difficult to quantify.

The legal news arrives alongside separate regulatory scrutiny abroad. Australia's eSafety commissioner found what it described as significant gaps in how Snap addresses child sexual exploitation and extortion risks on its platform, adding a second jurisdiction to the company's compliance workload.

The developments cut against otherwise improving fundamentals. Snap's second quarter beat on both lines, with revenue of $1.6 billion against $1.54 billion expected and 493 million global daily active users versus 487 million forecast, driving roughly 19% year-over-year growth alongside margin expansion and positive free cash flow. The stock jumped from $4.78 to about $5.77 on the print before fading toward $5.20. Truist and Bank of America trimmed targets to around $7 while holding neutral stances, and UBS and Mizuho set targets of $5.70 and $6.