Facebook (FB) Messenging App, Lawsuit Spell Trouble For Snapchat, CNBC Discusses

Snapchat is in hot water as Facebook (FB) rivals it with a similar 'disappearing' messaging app and as a 14-year-old boy sues the company, CNBC's Julia Boorstin said on CNBC.
By Lindsay Rittenhouse ,

NEW YORK (TheStreet) -- Snapchat is being sued by a 14-year-old boy and his mother who claim the social media app exposes minors to inappropriate content, CNBC's Julia Boorstin reported on "Closing Bell" Friday.

The mother and child, not identified because a minor is involved, filed a class action lawsuit yesterday that accuses Snapchat's Discover function of "intentionally" exposing minors to "harmful, offensive, prurient and sexually offensive content" without warning.

Discover allows organizations and companies such as the Daily Mail and Buzzfeed to post content on Snapchat for users to sift through.

"We haven't been served with a complaint in this lawsuit but we are sorry if people were offended. Our Discover partners have editorial independence which is something that we support," Snapchat responded to the lawsuit in a statement aired on CNBC.

The lawsuit was filed as social media rival Facebook (FB) - Get Report  begins testing a new feature on its messaging app, "Secret Conversation," which is similar to Snapchat.

Facebook's new function only allows users to share messages, while Snapchat users can share photos and videos as well, "Secret Conversation" lets them set timers on how long a message remains visible, according to Boorstin.

In addition, "messages can only be read on one device by the person you are communicating with," she continued.

"This looks like direct competition for Snapchat, whose disappearing messages have grown to 10 billion daily views," Boorstin commented.

Shares of Facebook closed up by 1.2% to $117.24 on Friday.

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Separately, TheStreet Ratings rated Facebook as a "buy" with a score of B+.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

This is driven by a few notable strengths, which can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins.

TheStreet Ratings feels its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

You can view the full analysis from the report here: FB

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