Snapchat Ad Sales Hurt by a Privacy Crackdown on Apple’s iPhones

Apple Iphone
Apple Iphone

Snapchat’s corporate parent said on Thursday that a privacy crackdown pushed out on Apple’s iPhones earlier this year is hurting ad sales, sparking investor concerns that the app’s financial development is falling into a tailspin.

After-hours trading was prompted by a disclosure in Snap Inc.’s third-quarter earnings report, which could foretell one of the greatest one-day losses in the company’s shares since it went public in 2017.

Snap’s stock dropped over 22% in extended trading on Thursday. If Friday’s regular trading session mirrors the drop, the stock will be approaching its previous one-day nadir in May 2018, when its price fell about 22%. A drop of that magnitude would deplete shareholder worth by over $30 billion.

The red flags raised by Snap’s poor performance could portend concerns for other applications that are having more trouble tracking their users’ online activity as a result of an April Apple update to the iPhone’s iOS software.

The update prevents online monitoring on iPhones unless the user gives explicit permission, making it more difficult for businesses to sell adverts based on data about people’s interests and where they are.

Snap CEO Evan Spiegel said in a statement that the Santa Monica, California-based firm had to “handle substantial challenges, including changes to the iOS platform that alter the way advertising is targeted.”

Facebook, a vocal critic of Apple’s new privacy measures, had already warned investors that the shift could hurt ad sales, but Snap’s numbers suggested the hit could be far higher than Wall Street expected. In extended trading on Thursday, Facebook’s stock fell more than 4%. On Monday, the social networking business is expected to reveal its most recent quarterly earnings.

Snap reported revenue of $1.07 billion for the July-September period, a 57 percent rise over the same period last year, but it fell short of Wall Street analysts’ predictions by around $30 million.
Even more concerning to investors is Snap’s forecast of $1.17 billion to $1.21 billion in sales for the current quarter. According to FactSet, analysts had predicted revenue of $1.36 billion.

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Jennifer Thomas
Jennifer Thomas is the Co-founder and Chief Business Development Officer at Cybers Guards. Prior to that, She was responsible for leading its Cyber Security Practice and Cyber Security Operations Center, which provided managed security services.