Supply chain crisis is hurting Facebook, Google and Snapchat



The escalating supply chain crisis isn’t just hurting manufacturers and retailers that sell goods off the shelf — it’s bleeding into the tech world. 

Companies that sell everything from toys to clothes to cosmetics are having difficulty getting their products into the United States thanks to a series of bottlenecks at ports — and a crisis is looming for US consumer spending as a result.

Less appreciated by Wall Street, however, has been the fact that if these companies can’t get their products to consumers, they’ll spend less money on advertising — which, in turn, hurts the bottom lines of companies like Facebook, Google and Snapchat that depend on ad dollars.

Snapchat’s 31-year-old co-founder and CEO Evan Spiegel acknowledged as much on a Thursday earnings call.

“Our advertising partners [are] facing a variety of supply chain interruptions and labor shortages,” Spiegel told investors. “This in turn reduces their short-term appetite to generate additional customer demand through advertising at a time when their businesses are already supply constrained.”

Evan Spiegel CEO of Snapchat
Evan Spiegel said that Snapchat’s “advertising partners [are] facing a variety of supply chain interruptions and labor shortages.”
Steve Jennings/Getty Images for TechCrunch

The dearth of advertising dollars during the typically lucrative holiday season — combined with recent changes to privacy controls on Apple devices that make it more difficult for social media companies to serve up targeted ads — have made for a one-two punch that’s giving investors the jitters. 

At market open on Friday, Snap shares had plunged a whopping 21.1 percent to $59.32, while Facebook stock was down 4.7 percent at $325.92 and Google shares fell 1.7 percent to $2,790.93.

“Companies are not going to advertise when they don’t have products on the shelves,” Wedbush Securities managing director Dan Ives told The Post. “There’s a real problem there for social media companies.” 

Like Snap, Facebook and Google will almost certainly address the supply chain crisis’ effect on ad dollars when both companies report third quarter earnings next week, Ives predicted. He said tech investors are “laser focused” on both that issue and the Apple privacy changes.

The analyst predicted that the supply chain-related advertising issues will clear up within months, while Apple’s privacy changes will hurt Facebook, Google and Snapchat for years to come. 

“The supply chain issues that Snap raised — it’s becoming a broader issue because products are not able to hit by the holidays or especially ahead of Black Friday, but I continue to view it as more transitory,” he said. “The Apple iOS privacy updates — that’s a black cloud over digital media that’s not moving away.” 

Facebook, Google and Snapchat did not immediately reply to requests for comment.


Source link