Morgan Stanley analysts affirmed their overweight rating and $400 price target for Facebook (FB) - Get Facebook, Inc. Class A Report after the social media giant said that it’s been underreporting ad performance on Apple (AAPL) - Get Apple Inc. (AAPL) Report iPhones due to changes in the iOS operating system.
Shares of the Menlo Park, Calif., company at last check were up 1.8% to $349.23.
Graham Mudd, Facebook's vice president of product marketing, said in a blog post on Wednesday that it had underreported web conversions on Apple’s iOS by about 15% in the third quarter. The executive added that there is a broad range for individual advertisers.
Analyst Brian Nowak said in a research note that he didn't think the blog post "puts our estimates at risk."
Apple included an update to the iPhone and iPad where users would have to choose to opt in to being tracked when they first launch an app.
"As we noted during our earnings call in July, we expected increased headwinds from platform changes, notably the recent iOS updates, to have a greater impact in the third quarter compared to the second quarter," Mudd said.
Nowak said that "part of this may be due to signal loss impacting the full three months of the quarter as opposed to about 1 to 2 months (based on our checks) in the second quarter"
He said the firm's analysts did not view the blog post as a sign Identifier for Advertisers headwinds are getting incrementally worse.
"That said," the analyst continued, "our ad checks and this blog post (in our view) also speak to how we don’t believe FB advertiser iOS and IDFA signal loss are consistently improving in 3Q,"
Nowak said that Facebook is working on multiple solutions but they are taking time.
"Ironically, FB also discovered that they have been underreporting iOS web conversions by about 15% ... which is actually a positive for the ad business as it speaks to more actual value/transactions per ad dollar spent."