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Snap shares were down nearly 20% at $60.8 before the bell, on
track to open at a near three-month low. Shares of Facebook,
Google parent Alphabet Inc and Twitter were down between 2% and
4%.
Apple's privacy updates, which were rolled out in June and July,
prevent advertisers from tracking iPhone users without their
consent. As a result, advertisers ended up spending much less
than expected as the tweaks make it difficult to measure and
manage their ad campaigns.
More than 10 analysts who cover Snap's stock cut their price
target by at least $4 and as high as $25, with many warning the
impact of Apple's move would linger till next year as Snap rolls
out tools of its own to attract advertisers.
"Apple iOS ad changes played out worse than virtually anyone had
expected in Snap's Q4 outlook," Doug Anmuth, a J.P. Morgan
analyst said in a note.
Anmuth expects the near-term impact of the privacy changes to be
more acute for Snap than for Facebook, Alphabet or Twitter. The
brokerage estimates at least two-thirds of Snap's fourth-quarter
revenue will be shaved off as a result.
Santa Monica, California-based Snap, which earns the vast
majority of its revenue from selling digital advertising on the
app, said the issue was compounded by global supply chain
disruptions and labor shortages, and caused brands to pull back
on their advertising spending.
"All three of these issues are industry-wide problems, not
Snap-specific problems, and we expect to hear them raised
consistently throughout the Q3 EPS season," Evercore ISI analyst
Mark Mahaney said.
(Reporting by Aniruddha Ghosh and Nivedita Balu in Bengaluru;
Editing by Ramakrishnan M.)
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