In an attempt to get in front of an ongoing lawsuit, Snap Inc. (SNAP, Financial) unsealed a former employee's complaint.
Snap's stock was down 2.32% on Wednesday just ahead of the closing bell.
CEO Evan Spiegel shrugged off the lawsuit's false data claims that the company misrepresented important metrics. Spiegel said the allegations "don't matter" and were "no big deal."
Claiming the company has "nothing to hide," Snap unredacted details of the suit filed by Anthony Pompliano.
Pompliano, a former employee of the Snapchat parent, claims the company misrepresented its growth during his interview and also misled investors when preparing for its IPO.
"Snap did not give investors misstated user metrics back in 2015; nor did Snap employees commit any of the panoply of alleged bad acts that litter Pompliano's complaint," recent court documents read.
Pompliano alleges that the company told him the growth rate was in the double digits, when it was really in the 1% to 4% range. He also claims Snap executives told outsiders that 87% of users completed the registration process and 40% continued using the app for a week. Pompliano says those figures were really 40% and 20%.
Snap says it will prove the allegations to be false "at the appropriate time in the appropriate forum."
Pompliano claims that Snap executives told company outsiders that it had 100 million daily app users. Snap's internal measurement tool at the time only showed 95 million users.
Snap's attorney denied the claim and said the alleged "minor metrics deviation" was a far cry from Pompliano's claim that the company was a "house of cards."
Pompliano was employed at Snap in 2015 for just three weeks before being fired. The former employee wants a court order to prohibit Snap from misrepresenting the reasons for his firing. Pompliano believes he was fired for raising concerns about daily app user metrics.
The ex-employee also claims he suggested growing the company's international numbers, particularly in areas that are highly active on social media. Pompliano claims that Spiegel said, "The app is only for rich people. I don't want to expand into poor countries like India and Spain."
Some legal experts assert that Snap's move to unseal the documents voluntarily is a sign that the company agress some of the claims are true.
Pompliano's lawyers said in a statement: "Snap withdrew its motion to seal because it knew it was flat wrong on the law and would lose its motion in court. This attempt to save face by Snap should serve as a reminder that no matter how big you are (or how many billions of dollars you have) in our system everyone has to play by the same set of rules."
Snap's attorneys said the ordeal "is just one big publicity stunt for him," referring to Pompliano. The attorneys pointed out that the dispute was contractually bound to take place in private arbitration.
Snap has been under scrutiny because of the former employee's lawsuit. The company was under further pressure on Wednesday after Instagram released a new feature that lets users post disappearing photos and videos.
Disclosure: Jacob Maslow does not own any stake in the companies mentioned nor does he have any relationship with them.
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