Snapchat parent Snap fell as much as 22% in premarket trading on Friday, after the social media company said changes to Apple’s privacy tracking settings had hit its third-quarter earnings and cited the global supply chain crisis and labor shortage as negative factors going forward.
Snap was last at $58.97 per share in premarket trading marking a 21.5% drop from its last official close. Its shares closed down 0.71% during regular hours on Thursday, before it released its results.
The company reported over $1 billion in revenue in the third quarter, but posted a $72 million net loss, according to its earnings report. Evan Spiegel, Snap chief executive, said the company missed the lower end of its guidance by $3 million in an earnings call on Thursday. He cited two factors that weighed on its bottom line.
“We missed the lower end of our guidance by $3 million due to a few key factors, including changes to advertising tracking on iOS and macro-economic factors that have impacted our advertising partners,” Spiegel said.
Changes were made to Apple’s iOS ad tracking that were broadly rolled out in June and July, Spiegel said. Apple started requiring all its apps to get permission from its users first to be tracked for ads, but device users only allowed this 25% of the time, according to Bloomberg.
“While we anticipated some degree of business disruption, the new Apple provided measurement solution to not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS,” Spiegel continued.
The impact of the pandemic on the global supply chain and labor supply affected Snap’s ability to generate additional customer demand, Spiegel said.
“At a time when their businesses are already supply constrained, the ongoing magnitude and duration of these global supply and labour disruptions are inherently unpredictable, and in the meantime we are focused on supporting our partners in this uncertain environment,” Spiegel said.
Snap’s downbeat outlook affected other technology companies. Google parent Alphabet fell 2% while Facebook dropped 4% in premarket trading.