Has Snap (and perhaps other social media platforms) been Appled?
Whatever the case, Snap shares plunged 30% at one stage in after-hours trading after revealing a reasonably solid set of September quarter numbers, as one major negative sparked concerns about social media companies.
The company’s shares finished the after-hours session down a still nasty 22%.
Snapchat’s daily users hit 306 million, an increase of 57 million, or 23%, year-over-year. Growth might be slowing as expected after being boosted by the lockdowns and pandemic, but revenues are rising – up 57% to $US1.067 million while net losses shrank to $US72 million.
Snap is the first of the big social media platforms to report quarterly figures and is seen a bellwether for the industry. Facebook, Twitter and Google parent Alphabet report next week. Facebook and Twitter shares both dropped more than 6% after Snap’s latest numbers were released and were still down more than 3% when dealing stopped after hours.
Snap is massive among Gen Z (13-24 years), bigger than Facebook, Instagram and Twitter in the key younger demographic, where influencers on Snap thrive (as they do on TikTok).
So no concerns on the face of it, but these comments from CEO Evan Spiegel triggered the selloff.
“We’re now operating at the scale necessary to navigate significant headwinds, including changes to the iOS platform that impact the way advertising is targeted, measured, and optimized, as well as global supply chain issues and labor shortages impacting our partners.”
Analysts said that was confirmation that changes to Apple’s privacy policies were having the much speculative negative impact on social media platforms.
The Apple privacy updates prevent digital advertisers from tracking iPhone users without their consent and Snap said that an ad measurement tool provided by Apple “did not scale as we expected.”
Snap said it expects the Apple privacy changes and global supply chain disruptions (which are impacting some of the company’s key demo skewing advertisers in cosmetics and clothing) to linger through the fourth quarter which is quite serious because that’s the huge holiday selling season and if you can’t carry as many ads in this boom time, it’s going to be a lean holiday for the company.
