Snap's stock plummets by 22% as Apple’s iPhone privacy changes hit its advertising business

Snap Inc, the parent company of Snapchat, saw its stock tumbling 22 per cent after missing revenue expectations for its third-quarter (Q3) earnings. However, daily active users on Snapchat rose 23 per cent (year-over-year) to 306 million.

The shares fell as Apple's iPhone privacy changes disrupted Snap's advertising business.

In an earnings call late on Thursday, Snap CEO Evan Spiegel said that the company missed the lower end of its guidance due to a few key factors, including changes to advertising tracking on iOS and macroeconomic factors that have impacted our advertising partners.

"Our advertising business was disrupted by changes to iOS and tracking that were broadly rolled out by Apple in June and July. While we anticipated some degree of business disruption, the new Apple provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS," he elaborated.

He admitted that the impact was compounded by the ongoing macroeconomic effects of the global pandemic, with its advertising partners facing a variety of supply chain interruptions and labour shortages.

"The ongoing magnitude and duration of these global supply and labor disruptions are inherently unpredictable and in the meantime, we are focused on supporting our partners in this uncertain environment," the Snap CEO said.

The company generated total revenue of $1.067 billion in Q3, an increase of 57 per cent year-over-year.

Despite the challenges, Snap crossed $1 billion in quarterly revenue for the first time.

For the fourth quarter of 2021, the company expects revenue to be $1.16-1.20 billion.

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