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Supply chain crisis is hurting Facebook, Google and Snapchat

October 23, 2021
in Technology News
Reading Time: 2 mins read
supply ads - TodayHeadline


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.

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