Shares of Snap Inc fell 25 per cent on Thursday after the owner of Snapchat said privacy changes implemented by Apple Inc on iOS devices hurt the company's ability to target and measure its digital advertising.
The results for Snap, which is the first of the major social media companies to report earnings, cast a shadow over Facebook Inc and Twitter Inc, which release third quarter results next week.
Snap's results also knocked Facebook shares down 6 per cent, Twitter down 7 per cent and Alphabet fell 3 per cent on Thursday.
The Apple privacy updates were rolled out in June and prevent digital advertisers from tracking iPhone users without their consent.
A new ad measurement tool provided by Apple hampered the ability for companies to measure the performance of their ads, upending many of the ways advertisers have been accustomed to doing business for decades, said Snap Chief Executive Evan Spiegel during a conference call with analysts.
This has definitely been a frustrating setback for us, he said.
Snap added it expects the Apple privacy changes and global supply chain disruptions to linger through the fourth quarter, which is typically the highest-earning period for social media companies when brands ramp up marketing for the holiday season.
Many of the advertisers who place ads on Snapchat are in the beauty, fashion and consumer goods industries.
Snap said the supply chain disruptions affected a wide variety of advertisers across industries and regions.
Revenue for the third quarter ended Sept. 30 was US $1.07 billion, missing consensus estimates of US $1.1 billion, according to IBES data from Refinitiv.
Daily active users, a metric watched closely by advertisers and investors, rose 23 per cent year-over-year to 306 million, beating analyst estimates of 301.9 million.
Snapchat has worked to attract and retain users by building new features like the ability to discover restaurants and stores through a map feature, or play virtual games with friends.
The net loss during the quarter was US $72 million, or 5 cents per share, narrowing from US $199.9 million, or 14 cents per share, in the year-ago quarter.
Snap forecast fourth quarter revenue between US $1.16 billion to US $1.2 billion, and daily active users between 316 million to 318 million.