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Facebook, Alphabet Lower as Apple Privacy Changes Spook Snap

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investing newStock Markets49 minutes ago (Oct 22, 2021 05:44AM ET)

Facebook, Alphabet Lower as Apple Privacy Changes Spook Snap
© Reuters.

By Dhirendra Tripathi

Investing.com – Facebook (NASDAQ:) and Alphabet (NASDAQ:) shares were under pressure in Friday’s premarket trading in a read across from Snap’s (NYSE:) badly-received third-quarter numbers late on Thursday.

Facebook stock traded 3.6% lower and Alphabet stock down 1.8%. Snap, with a much smaller market cap, plunged nearly 20% premarket.

Snap Thursday reported a 57% increase to $1.07 billion in third-quarter revenue but that was below expectations and illustrated the damage that Apple (NASDAQ:)’s new privacy rules are posing to apps dependent on advertising revenue.

The update to Apple’s privacy policy, rolled out in the June quarter, make it tougher for apps to track users and source their personal data for ad targeting. Users now have to opt-in to let apps track them, thus making it more difficult to measure the effectiveness of ad-spend. Short of adequate data, companies are reluctant to spend big money to advertise.

“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,” CEO Evan Spiegel said.

The company had warned pf the impact when it published its second-quarter earnings, but the stock had held its ground, supported by confidence that social media companies were largely immune to the problems of supply chain disruption that have plagued retailers and manufacturers in recent months.

The company said fourth-quarter revenue should be around $1.18 billion, as the privacy changes exert a continued drag on performance.

Facebook too has warned of the rules posing a challenge to it and its advertisers though comments made by a senior executive last month seemed to provide some succor. Graham (NYSE:) Mudd, Vice President of Marketing at the social media giant, said the company is likely understating the effectiveness of its advertising on Apple devices.

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