Shares of Snap Inc. (SNAP) edged higher in premarket trading on Thursday, February 12, 2026, rising approximately 0.3% following a 4.6% decline in the prior session. The modest rebound comes amid significant legal and corporate developments for the social media company.
Texas Lawsuit Alleges Safety Failures
The Texas Attorney General, Ken Paxton, filed a lawsuit against Snap on Wednesday, accusing the company of deceptive practices related to child safety on its Snapchat platform. The complaint alleges that Snap misled parents about the app's safeguards and exposed minors to mature content, including material featuring profanity, drugs, nudity, and sexual themes. The lawsuit specifically targets features like "Snapstreaks," which are designed to encourage daily engagement, labeling them as potentially addictive. Paxton is seeking civil penalties of up to $10,000 per alleged violation and a court order to prevent Snapchat from marketing to underage users.
A Snap spokesperson contested the allegations in a statement, arguing the lawsuit "fundamentally distorts" the platform's operations and noted that no single safety measure can eliminate all online risks. This legal action places Snap squarely within a broader regulatory crackdown by U.S. state officials focused on child safety and social media design, a trend that could lead to protracted legal battles, substantial legal expenses, and potential mandates for product overhauls or stricter marketing rules.
Insider Selling and Analyst Action
In a separate regulatory filing, Snap co-founder and Chief Technology Officer Robert Murphy indicated plans to sell 1 million shares under a Rule 144 filing, with a proposed sale date of February 10. The filing also noted a prior transaction by a trust that sold an additional 1 million shares. Both sales were conducted pursuant to a Rule 10b5-1 trading plan, a pre-arranged mechanism commonly used by corporate insiders.
Concurrently, the investment research firm Arete upgraded Snap's stock rating to "Buy" from "Neutral." However, the firm simultaneously reduced its price target for the shares to $7.30 from $8.60, reflecting a more cautious valuation outlook despite the improved rating.
Market and Competitive Context
Snap's stock has been under pressure with investors since its last quarterly report. While the company exceeded revenue expectations, it issued guidance indicating that first-quarter revenue would likely fall short of Wall Street forecasts. Management pointed to a challenging digital advertising environment and intense competition from larger rivals. Analysts have noted that Snap's ad platform still faces hurdles in attracting significant budgets from major enterprise advertisers.
The company's financial fortunes remain closely tied to a potential recovery in advertising demand over the coming months. For investors, the new legal risk from Texas adds another layer of uncertainty. Legal proceedings of this nature often involve lengthy procedural delays, including motions, appeals, and potential dismissals, which could weigh on the stock for an extended period.
Market participants are now closely monitoring Snap's forthcoming legal responses in the Texas case, as well as any updates to its safety tools and marketing strategies. The next earnings report is tentatively scheduled for April 28, according to data from Wall Street Horizon, though this date remains unconfirmed. The stock closed the previous session at $4.99.
