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Author: Alan LittleDate: 2021-10-25

Snap (SNAP) -22% as Apple’s (AAPL) privacy changes hit Q3 revenue

Snap (SNAP) said that changes to Apple’s (APPL) privacy policies disrupted its ad business as its Q3 revenue fell short of expectations and shares plunged 22%.

Snap (SNAP) shares plummeted 22% on Friday after the social media company said that Apple’s new stringent privacy policies had disrupted its advertising model as its Q3 revenue missed forecasts.

Snap CEO Evan Spiegel admitted that its ad partners had found it difficult to “measure and manage their ad campaigns on iOS” after Apple started giving its users the ability to opt out of data tracking earlier this year.

While a “degree of business disruption” was initially expected, there was actually a significant impact on Snap’s advertising business and its revenue of $1.07bn came in $300m short of the $1.10bn consensus as a result.

The Santa Monica-based business did deliver an earnings beat with $0.17 adjusted earnings per share versus $0.08, while global daily active users (DAUs) of 306 million also trumped the 301.8 million forecast.

However, Snap sees Apple’s privacy changes, along with global supply chain issues and shortages of skilled staff, weighing on earnings in Q4.

Snap expects revenue to top out at $1.20bn during the current quarter, which is some way short of the $1.36bn that analysts were expecting.

CFO Derek Andersen noted that the ad changes would have a greater impact over the holiday season as this would normally be the time when demand, pricing and capacity would be at its “peak”.

The growth of DAUs still looks healthy though, with Snap expecting as many as 318 million people to log on regularly in Q4 against the 311.8 million Wall Street consensus.

SNAP traded heavily down on Friday, with the 26.59% decline by close in New York setting a $55.15 price.

Snap’s social media rivals Facebook (FB) and Twitter (TWTR) also struggled, falling 5.05% and 4.83%, respectively.

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