Snap faces investor lawsuit for downplaying the impact of Apple’s ATT

As reported by Reuters, a Snap Inc investor sued the social media company last Thursday, alleging that it downplayed how Apple’s ATT threatened its ad revenue. 

The lawsuit filed in Los Angeles federal court comes three weeks after Snap shares fell 25% on news that Apple’s privacy changes had hurt Snap’s ability to target and measure digital advertising.

Reuters reported that the lawsuit seeks damages for 25% stock drop in October. 

The Santa Monica, California-based social media company said revenue was $1.07 billion, up 57% for the three months ending Sept. 30, slightly below analysts’ expectations and its own guidance. 

“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 ad partners to measure and manage their ad campaigns for iOS,” Snap said when it reported its Q3 earnings. 

“This has definitely been a frustrating setback for us,” Snap CEO Evan Spiegel had said.

Investor Kellie Black says in the lawsuit that Snap and several executives oversold the company’s ability to adapt to Apple’s App Tracking Transparency framework that rolled out broadly in April.

“A spokesperson for the Santa Monica, California-based company declined to comment on the litigation on Friday.”

According to a recent report by the Financial Times, Apple’s privacy changes have caused social media companies such as Snapchat, Facebook, Twitter and YouTube to lose about $9.85 billion.

Mark Zuckerberg said in the Q3 conference call that Facebook experienced revenue headwinds in the third quarter due to Apple’s ATT. The company’s Q3 revenue topped $29 billion, up 35% year-over-year, but fell short of analysts’ expectations.