Following the Snap report, shares of Facebook, Twitter, and Google fell
Snap (SNAP) shares fell 21.6% after the close of trading on Thursday, losing $16.21 per share after the report’s publication for the 3rd quarter of fiscal 2021, which ended in September.
Since the beginning of the year, Sharp’s shares have increased by 50%, and over the past 12 months by 105.8%.
Snap reported record earnings per share of $0.17, more than the market analysts’ estimate of $0.08.
Revenue increased by 58% (compared to last year’s value) to a record $1.07 billion but was below Wall Street forecasts of $1.10 billion. In addition, the growth rate slowed down compared to the previous three quarters. Snap quarterly revenue and profit statistics.
Snap reported 306 million daily active users (DAU), up 4% from the 293 million the company registered in April. It is almost 23% higher than the 249 million daily users reported a year earlier. The company expects to reach 316 to 318 million DAU in the fourth quarter, higher than market forecasts of 311.8 million.
Snap’s Problems are common to the Digital Advertising Industry.
In the comments to the report, Snap executives announced two serious negative factors that affected the company’s revenues and profits in the reporting quarter.
- Changes to the user privacy rules introduced by Apple in iOS had a more significant negative impact on the results than expected in Snap.
In April, Apple updated its mobile operating system to give users the option not to share or track their data, making it harder for software developers to track users in their apps and for advertisers to target their ads.
Snap called this factor the reason for the loss of revenue of $ 3 million in the third quarter. At the same time, Snap management gave a forecast of a slowdown in revenue growth in the fourth quarter to only 19-20% compared with a 58% growth in the third quarter, in digital terms, it is $1.16 – $1.20 billion against analysts’ forecasts of $1.36 billion.
However, Snap’s CEO held back his criticism of Apple, adding that these privacy changes were “important for the long-term health of the ecosystem” and that the company “fully supports them.”
- Global supply chain issues affect the digital advertising market.
Snap said that the global shortage in supply chains and staffing problems affected the number of digital advertising orders on the platform. Since it is difficult for companies to meet current demand and solve the problem of hiring staff, they reduce advertising sales incentives.
Pessimism is added to investors because the current quarter falls on the most crucial holiday season.
Market analysts pointed out the short-term nature of these problems. Still, they acknowledged that they could have a significant impact on the digital advertising market in the short term and affect the financial results of the largest companies in this industry: Google (GOOGL, GOOG), Facebook (FB), and Twitter (TWTR).
Shares of Facebook, Twitter, and Google fell 4.4%, 4.8%, and 1.96%, respectively, in non-trading time on Thursday.
Facebook will report its quarterly profit and earnings on Monday, October 25, after the market closes. Twitter and Google’s financial reports will be on Tuesday, October 26, after the market closes.
