Snap, the parent company of disappearing-message app Snapchat, reported third-quarter revenue that missed Wall Street's expectations on Thursday. At one point, Snap's shares plunged nearly 25% in after-hours trading to $56.36 per share.
The company posted $1.07 billion in revenue in the third quarter, below the $1.1 billion forecast by analysts surveyed by Thomson Reuters. Snap earned 17 cents per share, beating estimates of 8 cents per share.
Snap's revenue miss comes after Apple introduced a new feature called App Tracking Transparency that prompted developers to ask users for permission to track them. Social media companies have warned that the privacy feature could affect ad targeting. Snap also faces stiff competition from larger tech companies such as Google and Facebook.
Snap CEO Evan Spiegel said on a conference call that Apple's privacy feature disrupted Snap's ads business more heavily than the company expected.
"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," he said.
Businesses, for example, aren't able to target ads based on whether a user has installed the app. Snap said it's working on its own tool to help advertisers measure whether their campaigns are working. "We've certainly seen some early signs of success, but it's going to take a while," Spiegel said.
Advertisers are also grappling with supply chain interruptions and labor shortages during the pandemic, which could impact how much they spend on marketing. Snap said it expects the company's fourth-quarter revenue to be between $1.17 billion and $1.21 billion, below estimates of $1.41 billion.
Snap grew its audience to 306 million daily active users in the third quarter, up 23% compared with the same period last year.