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Snap shortfall shows supply-chain woes hitting social media

FILE PHOTO: A woman stands in front of the logo of Snap Inc on the floor of the New York Stock Exchange (NYSE) in New York City, NY, US.  (REUTERS)Premium
FILE PHOTO: A woman stands in front of the logo of Snap Inc on the floor of the New York Stock Exchange (NYSE) in New York City, NY, US.  (REUTERS)

Snap Inc.’s warning that supply-chain bottlenecks are prompting companies to hold back online advertising spending for the looming holiday season cast a shadow over larger rivals such as Google, Facebook Inc. and Twitter Inc., sending their shares tumbling.

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Snap Inc.’s warning that supply-chain bottlenecks are prompting companies to hold back online advertising spending for the looming holiday season cast a shadow over larger rivals such as Google, Facebook Inc. and Twitter Inc., sending their shares tumbling.

The Snapchat parent company on Thursday said holiday-quarter sales would grow 28% to 32% from a year earlier -- below analysts’ estimated growth of 48%. That forecast came chiefly because marketers aren’t planning to advertise for products they can’t sell, according to Snap’s chief business officer, Jeremi Gorman.

“We have heard from advertising partners across a wide variety of industries and geographies that they are facing headwinds in their business related to disruptions in global supply chains as well as labor shortages and increasing costs," Gorman said in prepared remarks ahead of a conference call. “We expect that some of these clients may opt to slow their marketing spend given the diminished need to drive incremental demand."

Shares of Santa Monica, California-based Snap tumbled more than 25% in extended trading after the company reported $1.07 billion in third-quarter sales, missing analysts’ average estimate of $1.1 billion.

Facebook shares declined more than 6% following Snap’s report. Twitter fell as much as 8%, and Google parent Alphabet Inc. slipped about 3%. Twitter, Facebook and Alphabet all report third-quarter earnings next week.

A global shortage of chips and other components has caused havoc for a range of industries, including retail. Out-of-stock messages increased 172% compared to January 2020, according to recent research from Adobe Inc. Some in the ad industry see supply-chain snags hitting electronics, cars and consumer-product brands -- all of which are big digital marketers. 

Gorman said there are still advertising verticals that Snap can focus on that are less reliant on the supply chain, like video streaming, entertainment and travel. “We’ve done this in the past," she added, pointing out that Snap had to redirect sales resources to certain ad categories when the pandemic first hit.

Other advertisers have been less affected, for now. “We aren’t seeing en masse or wholesale pullbacks yet," said David Cohen, chief executive officer of the Interactive Advertising Bureau, in an interview last week.

 

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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