Facebook shares pulled back 5% during Wednesday's session after an update about advertising on its platform.- Facebook said it has underreported a performance metric for ads on Apple's iOS system.
- Apple issued its latest iOS update with privacy features on Monday.
Facebook shares dropped Wednesday after the social media heavyweight said it has underreported advertising-related performance stemming from privacy changes made by Apple on its mobile operating system.
Shares fell as much as 5% to $340.69 then trimmed the pullback to 4%.
Facebook said in its business blog that it's hearing from clients that their costs for advertising have increased and that it is becoming more difficult for them to measure the impact of their campaigns on its platform.
"In some cases, this is due to underreporting on our part. Our estimate is that in aggregate we are underreporting iOS web conversions by approximately 15%; however there is a broad range for individual advertisers," Facebook said.
iOS refers to Apple's mobile operating system, with iOS 15 launched on Monday. Apple continued rolling out privacy features for its system which include giving iPhone users the ability to block email tracking by advertisers. Facebook said it noted during its July earnings call that it expected iOS updates to have a greater impact in the third quarter compared with the second quarter.
Facebook said it believes "real world conversions," like sales and app installs, are higher than what's being reported for many advertisers. It said actions that it's taking include improving conversion modeling and stepping up investment ahead of the 2021 holiday season, a crucial period for advertisers.
"We're optimistic about our multi-year effort to develop new privacy-enhancing technologies that minimize the amount of personal information we process, while still allowing us to show personalized ads and measure their effectiveness," said Facebook.