Snap shares fell around 22% as the market opened Friday morning, the day after Snap announcing Apple's ad-tracking changes is presenting more of a challenge than it thought. "We grappled with industry changes to the way advertising is targeted, optimized, and measured on iOS that created a more significant impact on our business than we had expected," Snap's Chief Business Officer Jeremi Gorman said on the company's earnings call Thursday.
Snap continues to grow quickly, reaching 306 million daily active users during the most recent quarter and growing its revenue 57% year over year. But the company still missed its Q3 earnings target. Snap said the setback was brought on by a few different issues, namely supply and workforce problems, but seemed to pin the majority of the issues on Apple's new privacy rules that require apps to ask users if they want to be tracked. "While we anticipated some degree of business disruption," Evan Spiegel said on the earnings call, "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."
Facebook has also expressed concerns about the privacy change, saying the rule makes it harder to track ad performance. Lots of users have opted out of ad-tracking on Facebook's app since the change. Spiegel said that going forward, Snap is investing in building better "first-party tooling and measurement solutions" to better work with advertisers now that the third-party connects are increasingly untenable. Spiegel projected confidence for Snap's long-term future, but its investors are clearly nervous about where things go from here. And Snap's performance doesn't bode well for the other companies affected by Apple's policy change.
Correction: This story was updated to correct the number of Snap's daily active users. This update was made Oct. 22, 2021.