Wedbush analyst Daniel Ives wrote in a note to clients on Friday that a successful debut of Apple’s new streaming-video service Apple TV+ could be worth $15 a share.
David Marino-Nachison for Barron’s:
Apple, he wrote, could “disrupt roughly 10% of Netflix’s target customer base within the next 12 to 18 months and along with…Disney create a much more competitive pricing environment and market share landscape.”
He sees 100 million Apple subscribers within four years as realistic and thinks that could lead to $7 billion to $10 billion in annual revenue.
“If Apple is successful with its latest streaming endeavor and reaches some of these potential subs/revenues numbers annually we estimate, this will add roughly $15 per share to our sum-of-the-parts valuation on Apple,” Ives wrote.
MacDailyNews Take: Apple TV+, at just $4.99 per month, doesn’t have to disrupt (take) any Netflix subscribers; it’s additive. Most people who already subscribe to Netflix will add Apple TV+, not drop Netflix for it.
Ives reiterated his Outperform rating on AAPL shares, and boosted his price target from $245 to $265.
What difference does it make whether Netflix is disrupted or not? AppleTV+ simply has to gain subscribers with decent content even if there aren’t a majority of Netflix switchers. I’m sure many people will end up having at least a couple of streaming services. Apple has to do its best to build a loyal AppleTV+ subscriber base no matter what Netflix or Disney does. I hope Apple doesn’t just have its own content but also gets other content such as older movies and TV shows. I wish Apple could get some rights to show So. Korean and Japanese dramas which have quite a bit of popularity in America. Amazon Prime has quite a few Bollywood films, so getting Bollywood film content could also help Apple fill out content.
Netflix’s crazy valuation is based mainly on some potentially high subscriber growth, so any other streaming platforms could slow down that subscriber growth and give Netflix a much saner P/E. There is absolutely no reason why Apple couldn’t compete somewhat with Netflix and give Apple stock a higher valuation.
Make the device (ATV) more worthy and make library more substantial and AAPL WILL take a substantial chunk from NFLX. I pay $16/mo to NFLX and and would switch promptly IF the 2 conditions materialized.