Apple headwind for Snapchat: Snap shares plummet

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Snap achieved 57 percent more sales and two thirds less net loss in the third quarter of 2021. For the first time, Snapchat generates more than $ 1 billion in one quarter and has over 300 million daily users (DAUs). A nice present for the communications service’s tenth birthday? Not at all, say the institutional investors who had planned better advertising business. After the numbers were released, Snap shares crashed more than a quarter instantly in after-hours trading.

In the further course of the year, the security price only recovered slightly to -21.5%. Investors had expected better results and a friendlier outlook. But since the spring, Apple has been taking action against clandestine user tracking in apps. From version 14, the operating system for iPhones (iOS) and iPads (iPadOS) no longer gives out the “Advertising Identifier”, which enables tracking across apps, so easily: Programs must obtain permission from the user for tracking before they can start advertising May read out identifiers.

Users can also decide not to share their exact location for apps in the future, but only to give a rough indication. In addition, individual photos can then be released for apps instead of having to give them access to the entire photo library. The secret query of the clipboard is now more difficult. Starting with iOS 14, users are advised of the readout. Another new feature is that apps also have to obtain the consent of the user to access the local network.

As it turns out, fewer and fewer users are willing to sign up for the coststo have toll-free use of a service monitored in this way. This means that advertising brokers like Snap can no longer understand exactly which advertising led which consumer to make which purchase decision. So part of the previously hoped for advertising revenue is lost.

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Snap CEO Evan Spiegel tried Thursday night to portray the situation as rosy: Snapchat is now large enough to be controlled by “significant headwinds, including changes to the iOS platform that affect how advertising is addressed, measured and optimized.” He also sees Snap as prepared for the global problems in supply chains and a labor shortage at advertisers.

But then Spiegel had to admit that the changes had a stronger impact than planned: “While we expected certain disruptions to the business, Apple’s new measurement solution did not work as well as expected,” said the manager in a conference call with financial analysts, ” This makes it difficult for our advertising partners to measure and manage their advertising campaigns for iOS. ” In July, Snap announced that Snapchat had few problems with Apple’s app tracking transparency.

Problems such as the shortage of chips, delivery interruptions, labor shortages and other direct and indirect effects of the coronavirus pandemic are slowing the advertising business: a producer who cannot deliver products is hardly inclined to advertise expensive products that cannot be delivered.

In spite of everything awaits Snapthat sales will rise to $ 1.16 to $ 1.21 billion in the current quarter. The financial analysts had bet an average of 1.36 billion and are now disappointed.

Snap had sales of $ 1.07 billion in the third quarter of 2021 (+ 57% year-on-year). The operating loss rose eight percent to $ 181 million. The company has 40 percent more full-time employees than a year ago, which means higher salary costs and more exhibitions of its own stock. Thanks to handsome profits from financial assets Snap was able to push the net loss by 64 percent to 72 million US dollars.

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The number of daily active Snapchatters rose by 23 percent year-on-year to 306 million. The influx of users is particularly strong outside of North America and Europe. The crowd of participants from the “rest of the world” has swelled by half to 130 million. However, with an average of not even 33 US cents per month and user (ARPU), they bring much less than a European (64 cents) or North American subscriber (273 cents).


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