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Twitter, Facebook, and digital ad stocks fell sharply

Shares of Twitter, Facebook, and other social media and digital advertising companies are down after Snap published that .it missed revenue expectations in the third quarter. It happened after Apple’s iPhone privacy changes interrupted its advertising business. Snap also suggested that supply chain interruptions were suffocating short-term spending on advertising. It resulted from companies that refused to drive demand for products they might not have in stock.

Facebook and Twitter both fell at around 6% after several hours, while Alphabet (Google parent company) and Pinterest dropped more than 2% after some hours. On Wednesday, Pinterest also fell more than 2% after reports that PayPal was considering an acquisition during regular trading. Facebook, Alphabet, and Twitter are planning to report earnings next week.

 

Overview

Digital advertising firms leveraging consumer data were also affected by these changes. The Trade Desk, Liveramp, and Magnate dropped around 3 to 5% after hours.

Technology firms have long-established concerns over the ATT (privacy change) or App Tracking Transparency, asking customers if they are willing to opt-in for tracking over a pop-up. Experts and critics say that these changes will make it more difficult for advertisers to track their digital ads` effectiveness.

In his prepared remarks, Evan Spiegel, the Snap CEO, said that the new Apple-provided measurement solution did not scale as expected while anticipating some degree of business disruption.

It made it more difficult for their advertising partners to measure and maintain their ad campaigns for iOS.

Spiegel also suggested that supply chain disruptions and interruptions with labor shortages reduced the short-term urge to produce additional consumer demand through advertising that caused Snap to give weaker guidance than analysts awaited for Q4.

On Thursday, Snap stock dropped 22% after announcing its third-quarter earnings. Earlier this year, Apple introduced privacy changes that disrupted Snap’s advertising business. After that, the company’s revenue missed Wall Street expectations.

Wall Street’s estimates versus Snap report:

  • Adjusted earnings per share: 8 cents vs. 17 cents
  • Revenue: $1.10 billion vs. $1.07 billion
  • DAUs – Global daily active users: 301.8 million vs. 306 million per StreetAccount
  • ARPU – Average revenue per user: $3.67 vs. $3.49 per StreetAccount
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