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Businesses The Almighty Buck

Snapchat Cited False User Numbers in Order To Boost IPO, Alleges Lawsuit by Ex-worker (yahoo.com) 30

A lawsuit filed against Snap Inc. by a former employee claims the company reported false growth numbers to investors in an effort to inflate its valuation. An anonymous reader shares a report: The plaintiff, Anothony Pompliano, joined the company (then known as Snapchat) as a growth lead in September of last year from Facebook. Pompliano claims the company's "institutional pandemic" of misrepresentation of its user numbers was fueled by its pursuit of a multi-billion dollar initial public offering (IPO) -- a number of prior reports have claimed the company could go public as soon as March. Snap's visual messaging app Snapchat is known for its popularity with younger millennials (aged 25 and under). Despite remaining tight-lipped about its official statistics, leaked reports put its daily active user base at 150 million (higher than that of fellow social platform Twitter). Additionally, its daily video views count hit an impressive 10 billion in April 2016. Numbers like these have had the industry buzzing over its expected IPO, with analysts claiming the company could be valued as high as $25 billion.
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Snapchat Cited False User Numbers in Order To Boost IPO, Alleges Lawsuit by Ex-worker

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  • "Every internet company is based on lies, kid...lies, lies, lies. Also, never trust a kraut or a jap."

    • There are three kinds of lies. "Lies", "Damn Lies", and Statistics.

      Fake numbers are used so often that I simply assume a provider of any type is lying and half their numbers (at least). In addition to creating bogus (aka "test) accounts and forging numbers, companies today can go to a PR firm overseas and have them create a ton of bogus accounts for you.

      Facebook claims to have more accounts than there are people with Internet access in the world, and LinkedIn claims that there are hundreds of thousands of jobs for people with my background in the SF Bay area. Hyperbole w

      • by hey! ( 33014 )

        Fake numbers fall under the category "lies" or "damned lies". The trick to misleading with statistics is to stick to facts, but carefully selected ones.

  • I was asked to do this in my first job. It's very normal practice for releasing a new site unfortunately. However it's not usually for valuation but to get users on it. However it is a good point that it can influence that.
  • Though it's not difficult to imagine a firm would shade itself in the best possible light, it seems unlikely investors with uncommon sense would rely solely on a company's subjective self-appraisal.

    Also, it needs to be asked, "What is the plaintiff's motivation? Do-gooder or axe grinder?

  • Of course, the rubes buying Internet stocks these days only care about "number of users". The idea that a company actually has to earn a *profit* is not even considered by the Trumps buying the stocks.
    • Insert obligatory xkc...wait a minute...South Park is actually appropriate here.

      Give us some of that internet money! http://southpark.cc.com/clips/... [cc.com]

    • by hey! ( 33014 )

      I dunno. Amazon has seldom been very profitable, but it could have been if it wanted to be. For example Amazon has wielded effective monopsony powers in the publishing wholesale market for years now. If it had merely stuck to being an online bookseller it'd have been a lot more profitable than it has been, but a lot less valuable.

      If you look at the last 20 quarters [ycharts.com] of profits, clearly Amazon is run to break even when it comes to profits, but over the same period its market capitalization [ycharts.com] has grown from $

  • Do Americans now consider suing to be a sport? :)
  • by Pascoea ( 968200 ) on Thursday January 05, 2017 @12:22PM (#53610827)

    leaked reports put its daily active user base at 150 million ... with analysts claiming the company could be valued as high as $25 billion

    $166/daily active user? That number seems ridiculously high.

  • Every time you read millennials, replace it by snake people.
    This makes the bullshit a bit more funny.

Any sufficiently advanced technology is indistinguishable from a rigged demo.

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