Remember those Apple (NASDAQ:AAPL) iOS 14 privacy changes that really whapped some popular internet stocks? Well, soon it will be happening again, but this time we’re going to be dealing with Google privacy changes.
Google and its parent company, Alphabet (NASDAQ:GOOG, NASDAQ:GOOG), unveiled the Google privacy changes in mid-February. The announcement of the Privacy Sandbox was made in a blog post by Anthony Chavez, vice president of product management for Android Security & Privacy.
“Specifically, these solutions will limit sharing of user data with third parties and operate without cross-app identifiers, including advertising ID,” he said. “We’re also exploring technologies that reduce the potential for covert data collection, including safer ways for apps to integrate with advertising SDKs.”
The Google privacy changes won’t happen immediately. They’re about two years away. According to Forbes, Google is moving away from third-party cookies, but will look for ways to protect consumer privacy while still allowing targeting advertising.
If you invest in internet stocks, you’ve got a right to be concerned. Here are three stocks to watch as Alphabet rolls out its Google privacy changes:
Google Privacy Stocks: Meta Platforms (FB)
Meta Platforms, formerly known as Facebook, took a huge hit from Apple’s App Tracking Transparency (ATT) privacy changes. The same thing could happen when Google rolls out its Privacy Sandbox.
Meta says that it lost $10 billion in 2022 from Apple’s privacy changes. “Apple created two challenges for advertisers,” CFO Sheryl Sandberg said. “One is that the accuracy of our ads targeting decreased, which increased the cost of driving outcomes. The other is that measuring those outcomes became more difficult.”
Forbes’ Zak Doffman writes that the real problem, however, is Meta itself.
“The problem isn’t Apple or Google, it’s Facebook’s business model. It tracks people and sells them targeted advertising. People are sick and tired of it and Facebook has nothing to fall back on apart from its Metaverse, and is that going to work?” he writes.
FB stock is down more than 23% so far in 2021.
Like Meta’s Facebook, Snap was affected by Apple’s ATT privacy changes as well. And it makes sense that it was impacted by the Google privacy changes.
What’s good for Snap, however, is that the social media company and Snapchat parent is doing a better job of managing its risk. So, it’s possible that SNAP stock will be less at risk than Meta or other internet companies that rely on targeted advertising.
Snap says that its “making solid progress” on developing new ad measurement tools that preserve privacy.
CFO Derek Andersen said Snap built its advertising platform, “with privacy by design.” He said the impact from Apple’s changes are “likely to be experienced differently” at Snap than at other companies.
In the most recent quarter, Snap announced its first quarterly net profit, with revenues of $1.3 billion and earnings of 22 cents per share.
Google Privacy Stocks: LendingTree (TREE)
OK, you may be wondering why LendingTree is on this list along with two social media stocks. The reasoning is simple.
LendingTree operates an online loan marketplace for people shopping for loans and other credit products. Customers can get mortgages, refinance, shop for home equity loans, research credit cards, small business loans, personal loans and more.
And here’s the kicker: LendingTree was the No. 1 buyer of internet display ads for all of 2020, spending $187 million. That’s more than Amazon (NASDAQ:AMZN), Google, Verizon Communications (NYSE:VZ), and Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B).
Any company that relies on digital advertising as a way to reach a targeted audience will be one of those stocks to watch as Google rolls out its own privacy tools.
LendingTree reported quarterly earnings on Feb. 25. It posted revenue of $258.30 million, narrowly beating analysts’ expectations of $258.25 million. It was also an increase of 16% from a year ago. Earnings per share was a loss of 14 cents, which was better than the expected earnings loss of $1.16 per share.
“As we execute on our strategy, we are well positioned to continue our leadership in the consumer finance space,” CEO Doug Lebda said. “We are harnessing the incredible power of our brand, with its consistently high levels of aided awareness and combining it with our unmatched depth of partner relationships, to be the ultimate resource for consumers wanting to take control of their financial lives.”
TREE stock is down 9% so far in 2022, outperforming the Dow Jones Industrial Average and the S&P 500.
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders. As of this writing, he did not hold a position in any of the aforementioned securities.