Stock Market Today, March 26: Snap Tumbles on EU Child Safety Probe

Snap (SNAP 11.02%), social media and advertising platform, closed Thursday at $4.01, down 10.69%. The stock fell after the European Commission opened a formal Digital Services Act investigation into Snapchat’s child safety practices. Investors are watching potential regulatory penalties and compliance costs.

Trading volume reached 104.1 million shares, coming in about 120% above its three-month average of 47.4 million shares. Snap IPO’d in 2017 and has fallen 83% since going public.

How the markets moved today

The S&P 500 (^GSPC 1.74%) fell 1.74% to 6,477, while the Nasdaq Composite (^IXIC 2.38%) dropped 2.38% to 21,408 as rising oil prices weighed on markets. Within social media peers, Meta Platforms (META 7.96%) plunged 7.96% to close at $547.74 and Pinterest (PINS 3.85%) fell 3.85% and finished at $17.96 as investors reacted to landmark legal decisions.

What this means for investors

Snap shares plumeted to an all-time low today on news that European Union regulators would investigate child protection features on the Snapchat app. The probe will examine the platform’s age restrictions, safeguards against grooming, and protections against illegal content.

The investigation creates significant regulatory overhang for Snap. If the E.U. commission finds it has not complied with the Digital Services Act, it could levy hefty fines and introduce stricter oversight, both of which would impact the company’s margins.

The news comes as social media platforms face increased scrutiny worldwide. A U.S. court ruling on social media addiction today found that Meta had been negligent. Many more lawsuits could follow.