Snap shares drop 3% after court ruling narrows social media legal protections

Snap shares fell 3% after a federal appeals court rejected Section 230 immunity, exposing social media platforms to lawsuits over user content. The ruling allows over 3,000 lawsuits claiming Snapchat targeted minors with addictive features to proceed, raising potential legal costs and product restrictions. Despite a strong Q2 earnings beat, the legal uncertainty weighs on Snap and peers like Meta, Reddit, and Pinterest, dragging the sector lower. Investors will watch for further appeals and clarity on legal liabilities as the cases develop.