Snap stock fell Friday, following a 10% plunge on Thursday due to an equity analyst downgrading the company based on lingering concerns over changes Apple (AAPL) made to its operating system last year.
Cowen analyst John Blackledge slashed his price target on Snap (SNAP) to 45, from 75. He also downgraded Snap stock to market perform, from outperform.
Snap stock, after its 10% drop Thursday, fell another 4% to 36.85 during afternoon trading on the stock market today.
Among other social media stocks, Etsy (ETSY), after dropping 6.3% Thursday, fell another 3.5% Friday to 161.10. Pinterest (PINS), which fell 4.2% Thursday, dropped another 2.5% Friday to 32.10. Advertising accounts for almost all the revenue of these companies.
Impact Of Apple Changes To Snap Stock
The changes to Apple’s iOS, version 14.5, kicked in last April and changed the rules of mobile advertising by giving more power to users over privacy controls. The changes made it more difficult for advertisers to deliver personalized ads and measure ad interactions for additional targeting.
Cowen said it surveyed 54 U.S. ad buyers in December to assess digital ad trends as it relates to the Apple iOS changes.
“The respondents said there are noticeable declines in return on investment, as well as challenges regarding attribution and measurement and less ability to re-target consumers,” among other things, Blackledge wrote in a note to clients.
Advertisers found it more difficult to reach their target audience and measure ad impact.
“Other respondents stated that they are still in the early innings of finding effective tactics to mitigate the challenges, with some citing a shift onto other platforms such as Android and Connected TV,” said Blackledge.
Snap Challenges Expected To Persist
About 45% of respondents said they expect the challenges to persist for at least 12 months. About 30% of respondents expect to reallocate ad spending. Google search is set to be the top beneficiary.
Social media stocks have been on a roller-coaster ride over the last year. Etsy, along with Snap, Pinterest and other social media stocks, have dropped significantly since late October for various reasons.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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