- Social media and digital advertising stocks dropped after hours after Snap reported it missed revenue expectations in the third quarter.
- Snap said that Apple's iPhone privacy changes disrupted its advertising business.
- It also warned that supply chain interruptions were stifling short-term demand for advertising.
Shares of Facebook and Twitter and other social media and digital advertising companies are sharply down in after-hours trading, after Snap reported it missed revenue expectations in the third quarter as Apple's iPhone privacy changes disrupted its advertising business. Snap also warned that supply chain disruptions were stifling short-term spending on advertising, as companies do not want to spur demand for products they may not have in stock.
Facebook and Twitter both dropped as much as 6% and 5% after hours, while Google parent company Alphabet and Pinterest dropped more 2% after hours. (Pinterest also dropped more than 2% during regular trading following reports on Wednesday that PayPal was considering an acquisition.) Facebook, Alphabet and Twitter are set to report earnings next week.
Technology companies have long raised concerns over the privacy change known as ATT or App Tracking Transparency, which asks users through a pop-up if they want to opt-in for tracking. Critics say it will make it much harder for advertisers to track the effectiveness of their digital ads.
"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," Snap CEO Evan Spiegel said in his prepared remarks.
Spiegel also warned that that supply chain interruptions and labor shortages reduced "short-term appetite to generate additional customer demand through advertising," and caused Snap to provide weaker guidance than what analysts were expecting for Q4.