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Snap Bounces Back From Apple's Privacy Changes, With Shares Up 50%


04/02/2022


Snap Bounces Back From Apple's Privacy Changes, With Shares Up 50%
Snap Inc's advertising business recovered faster than expected from the effects of Apple Inc's privacy reforms on Thursday, and the company's stock soared 50% as it presented first-quarter guidance that was above analyst expectations.
 
The results were good news for a tech sector that has been battered since yesterday due to bleak forecasts and fears that Apple's privacy updates, which were introduced last year and allow users to prevent apps from tracking their online activity for advertising purposes, would hurt ad revenue, would hurt the industry.
 
Snap expects sales of $1.03 billion to $1.08 billion in the first quarter, with 328 million to 330 million daily active users. According to Refinitiv's IBES data, the outlook for both indicators exceeded analyst expectations.
 
Pinterest Inc, the digital pinboard company, also posted higher-than-expected sales on Thursday, and its stock climbed 20 per cent.
 
Snap and Pinterest's earnings reports contrast with those of Facebook owner Meta Platforms Inc, whose stock plummeted 26% on Thursday in what could be the largest single-day market value loss for a U.S. company, a day after the company said the impact of Apple's privacy changes could be "in the order of $10 billion" this year.
 
Advertisers' ability to target advertising to potential buyers and analyze ad success has been harmed as a result of the Apple upgrades, according to Meta.
 
By the end of the fourth quarter, a large portion of Snap's advertisers was using new ad measurement tools, and parts of Snap's advertising business were recovering "quicker than we anticipated," according to Snap Chief Financial Officer Derek Andersen, in prepared remarks released ahead of the earnings call with analysts.
 
Global supply chain problems and workforce shortages, on the other hand, have harmed advertising demand from consumer packaged goods and restaurant brands, he said.
Snap's revenue for the fourth quarter ending December 31 was $1.3 billion, up 42% from the previous quarter. According to Refinitiv's IBES statistics, the sum exceeded analyst projections of $1.2 billion.
 
Snapchat's daily active users increased by 20% year over year to 319 million, exceeding analyst expectations of 316.5 million.
 
When compared to its larger tech competitors, Snap still has a long way to go. It has devised a plan to entice new users in Latin America, Europe, and Asia. According to Meta, Facebook has 2.91 billion monthly users worldwide, which is flat compared to the previous quarter.
 
Snap also reported its first quarter of positive net income since its IPO, with earnings of $22.5 million in the fourth quarter, compared to a net loss of $113 million the year before.
 
(Source:www.rte.ie)