SNAP Stock: Why The Price Is Falling Today

By Amit Chowdhry ● Oct 22, 2021
  • The stock price of Snap Inc (NYSE: SNAP) fell by over 20% pre-market today. This is why it happened.

The stock price of Snap Inc (NYSE: SNAP) fell by over 20% pre-market today. Investors are responding negatively to the company’s third-quarter earnings today. Specifically, investors are feeling wary about how Snap’s advertising operations were disrupted by privacy changes that Apple made earlier this year.

For the quarter, Snap had reported adjusted earnings per share of $0.17 cents, which substantially beat Wall Street estimates. Revenue was slightly below expectations at $1.07 billion. The company also reported global daily active users (DAUs) at 306 million and an average revenue per user (ARPU) of $3.49. Net loss for the quarter narrowed 64% to $72 million compared to a loss of $200 million a year earlier.

While Snap CEO Evan Spiegel had praised Apple’s changes earlier this year, he indicated it would be a risk to the company’s Q4 earnings. And the company revealed that the new iPhone privacy settings had more of an impact than expected.

“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,” said Spiegel in a statement via CNBC.

Spiegel also noted that global supply chain interruptions and shortages in labor also reduced the short-term appetite for generating additional customer demand through advertising. Due to these issues, Snap CFO Derek Andersen is expecting the fourth-quarter revenue to hit between $1.16 billion and $1.20 billion. Analysts were expecting $1.36 billion for the fourth quarter (Refinitiv). Snap is now expecting to reach between 316 million and 318 million DAUs for the fourth quarter – which is slightly above expectations.

“Unfortunately, these changes are occurring during a season when our advertising partners would normally expect their supply chains to be operating at peak capacity, and at a time when we would otherwise expect peak advertising demand to drive peak contestation, and therefore peak pricing, in our auction,” explained Andersen.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.