Snap (SNAP) missed its third quarter revenue expectations by $3m, and it’s blaming Apple’s (AAPL) changes to its iOS ad tracking rules. While a $3m revenue miss isn’t the end of the world, Snap is being realistic about the challenges ahead, telling investors the ad tracking changes will continue to slow revenue growth next quarter.
The changes were made back in April of this year and require iOS users to opt-in to ad tracking. Given the choice, many users are unsurprisingly choosing no. This gives companies like Snap less data to target consumers with, leading to less efficient advertising.
Apple’s changes to its ad tracking might be good for user privacy, but the affect it’s had on Snap might scare away other companies from the iOS ecosystem. Meanwhile, Google’s (GOOG) Play Store ecosystem is looking like an increasingly attractive alternative after the company announced it will be lowering its commission fees for subscriptions and digital goods from 30% to 15% starting in 2022.
why it matters
Snap investors didn't take the gloomy revenue outlook well. Shares of SNAP plunged by 26% last Friday on the announcement.