Snap (SNAP) shares slumped lower Monday after analysts at Wedbush cut their rating and price target on the message app maker ahead of the group's fourth quarter earnings report next week.
Wedbush analyst Ygal Arounian lowered his rating on Snap to "neutral" from "outperform", and cut $20 from his price target to peg the shares at $36 each, citing the impact of Apple's (AAPL) Identifier for Advertisers (IDFA) privacy changes and intensifying competition from China-based TikTok.
Snap cautioned in late October that supply chain disruptions would hit advertising spending in the social media sector over the final three months of the year, adding that new privacy changes in Apple's operating system made it more difficult to track and target users with specific ads, "making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS."
We've seen little evidence of progress against IDFA since Snap reported 3Q earnings, with our checks indicating continued headwinds across digital advertising ... competitive factors are increasing as well, particularly from TikTok," Wedbush said.
Snap shares finished 1% lower on the session at $31.80 each, a move that extends the stock's six-month slide to around 58.3%.
Snap will publish its fourth quarter earnings on February 3, with analysts looking for adjusted earnings of 10 cents per share on revenues of $1.227 billion.
That would take the group's annual revenue to around $3.88 billion - some $50 billion shy of the 2021 tally recorded by TikTok owner ByteDance, according to Reuters.
Chief business officer Jeremi Gorman told investors in October that "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', and were reducing marketing spend as a result."
Snap forecast holiday quarter sales growth of between 28% and 32% -- well below the consensus forecast of 48% -- after posting softer-than-expected sales of $1.07 billion for the three months ending in September.
