Apple News could reach 19M subscribers, $2.2B in revenue by 2023, analyst says

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in AAPL Investors
Investment bank Cowen believes Apple News+ is a key pillar in growing Apple Services, and forecasts that it could reach 19 million paid subscribers by 2023.

Credit: Apple
Credit: Apple


In a note to investors seen by AppleInsider, lead Cowen analyst Krish Sankar predicts that Apple News+ could grow to $2.2 billion in revenue by 2023, a compound annual growth rate (CAGR) of 31%.

"We believe Apple's News app and the News+ paid subscription service (News platform) are well positioned to not only benefit from incremental subscriber additions but also accelerating advertising revenue growth," Sankar wrote.

He believes Apple News+ could be bolstered by both improving advertising platforms and a shift away from the Identifier for Advertisers tracking tag used on mobile devices after the release of App Tracking Transparency. The privacy feature, Sankar adds, could be a "disruptive event" that levels the playing field for ad networks in the iOS ecosystem.

The analyst adds that Apple's advertising endeavors could be on an encouraging trajectory because of the maturation of Apple Search Ads (ASA) on the App Store. Apple leveraging ASA and the recent changes to IDFA could accelerate ad revenue from Apple News in the coming years.

Cowen is currently modeling 36% Apple News ad revenue growth over the next three years, up from 30% in the prior three years.

"While we expect Apple to remain a small player in the overall digital ads market, we think there is opportunity to further monetize ASA across other portions of the Services portfolio longer-term," Sankar writes.

Sankar believes Apple News+ had about 11 million paid subscribers in 2020, generating revenue of about $550 million. Going forward, he believes that Apple News+ could reach 19 million subscribers by 2023. That could rake in $1.14 billion in subscription revenue and $1.02 billion in digital ad revenue from ad impressions, resulting in a total of $2.2 billion.

The analyst also believes Apple News+ could be a boon to the newspaper industry amid declining readership, concerns around misinformation, and plunging ad revenue.

He cites the mix of human-curated news content, sales diversification from subscriptions, improving ad platform tools, and a growing readership base with "high purchase intent" as reasons why Apple News could be an attractive return-on-investment for content and ad campaigns.

Sankar maintains his Outperform rating and $153 AAPL price target, based on a sum-of-the-parts analysis by applying a 27x earnings multiple on Apple's core business and a 46x multiple on Services. That leads to a blended 35x price-to-earnings (P/E) multiple on Cowen's 2021 earnings-per-share estimate of $4.35.

Comments

  • Reply 1 of 13
    Please, finally bring Apple News to Austria!
    watto_cobra
  • Reply 2 of 13
    Sadly, it’s available in only 4 countries: Australia, Canada, the United Kingdom and the United States. It’ll take a bigger base to grow it by any significant degree. It’s hard to understand what legal/copyright issues might be holding back a broader rollout (Apple TV + was available in over 100 countries from day one). German, Spanish, French, Russian, Mandarin and Hindi versions of Apple News would transform the service!
    osmartormenajrwatto_cobra
  • Reply 3 of 13
    Rayz2016Rayz2016 Posts: 6,665member
    Sadly, it’s available in only 4 countries: Australia, Canada, the United Kingdom and the United States. It’ll take a bigger base to grow it by any significant degree. It’s hard to understand what legal/copyright issues might be holding back a broader rollout (Apple TV + was available in over 100 countries from day one). German, Spanish, French, Russian, Mandarin and Hindi versions of Apple News would transform the service!
    It might not be copyright. It might be access to subscriber info. 
    watto_cobra
  • Reply 4 of 13
    I cancelled because even if i blocked sports, entertainment, fashion and celebs, that crap kept appearing in my feed. Not happy.....
    osmartormenajr
  • Reply 5 of 13
    I love Apple News! Its become my go to app for whenever I have 5 mins to kill waiting in a line somewhere or I'm just bored. I suppose I'm something of a news junkie so Apple News has become a very reliable dealer. True, the feed preferences don't always give you exactly what you specified but that should evolve over time. I'm always able to find something of interest for a quick hit of reading even as a non-paying customer.

    I would gladly pay but see no reason to while there are still so many free ways to get news. It seems like a no-brainer to offer this kind of news aggregator service and I wonder why Facebook has such a hard time doing it. I don't think Apple is going through a lot of trouble with Russian/Chinese propaganda articles sneaking in. Their model seems to rely on letting the sources do that for them. So you kind of know what you're getting for when you see an article from someplace like the Wall Street Journal versus something off Buzzfeed or Page Six of New York Post. In my mind this is a much better way of handling it, because you know what political view a news article is going to have if its sourced from Fox News versus one off Politico or Huffington Post.

    I hope Apple News continues to grow and more news outlets join in! It can only get better and its nice to be able to bookmark things or follow up on articles when I get home. Great service!
    mobird
  • Reply 6 of 13
    entropysentropys Posts: 2,823member
    I just can’t ever let someone else “curate” my news for me.  And I am astonished so many are comfortable doing just that.
    lkruppmuthuk_vanalingam
  • Reply 7 of 13
    DAalsethDAalseth Posts: 1,440member
    entropys said:
    I just can’t ever let someone else “curate” my news for me.  And I am astonished so many are comfortable doing just that.
    What news service isn’t curated? These aggregators, sure I understand, but CNN, BBC, CBC, DW, they all decide what is newsworthy and what isn’t worth the effort.
    lkrupproundaboutnowJapheyapplguyVermelhowatto_cobra
  • Reply 8 of 13
    WgkruegerWgkrueger Posts: 256member
    entropys said:
    I just can’t ever let someone else “curate” my news for me.  And I am astonished so many are comfortable doing just that.
    LOL
    edited April 6
  • Reply 9 of 13
    robin huberrobin huber Posts: 3,423member
    Like it except for too many stories that are nothing more than platforms for click throughs to buy products for which the magazine is paid a bounty. Keep ads and journalism separate. 
  • Reply 10 of 13
    Like it except for too many stories that are nothing more than platforms for click throughs to buy products for which the magazine is paid a bounty. Keep ads and journalism separate. 
    That's surprising to see you say that. The stories which are ads are clearly identified as such and I think there are much less of them than when I go to a site like cnn.com or even the newspaper websites.

    I guess you could call the 'trending news' story section curated but I don't think Apple has someone behind the scenes forcing stories to be seen. The stories change too frequently for that to be the case.

    As for being curated, every one of these news sources has someone called an editor in chief. It's their job to shape the stories around that new provider's editorial opinion (which unfortunately oftentimes gets hijacked by the publishers - see Jeff Bezos and Washington Post). This has been common knowledge for the past 100 years! Its a shame that so many people appear to be so uninformed about how journalism works.

    What people should be more concerned about are reading 'news' stories that are not accurate, outright lies, propaganda or opinion masquerading as news. This is less likely to be found on Apple News because of the way the service has been set up. If you want to be manipulated in this way, get your news from Facebook!
  • Reply 11 of 13
    anantksundaramanantksundaram Posts: 20,159member
    I find this hard... no... impossible to believe. 

    It’s the most anodyne nonsense, essentially screams “USAToday!!!” of digital news aggregation. 
    muthuk_vanalingam
  • Reply 12 of 13
    gatorguygatorguy Posts: 22,805member
    Like it except for too many stories that are nothing more than platforms for click throughs to buy products for which the magazine is paid a bounty. Keep ads and journalism separate. 
    That's surprising to see you say that. The stories which are ads are clearly identified as such and I think there are much less of them than when I go to a site like cnn.com or even the newspaper websites.

    I guess you could call the 'trending news' story section curated but I don't think Apple has someone behind the scenes forcing stories to be seen. The stories change too frequently for that to be the case
    https://www.nytimes.com/2018/10/25/technology/apple-news-humans-algorithms.html
  • Reply 13 of 13
    gatorguy said:
    Thanks for that link, I hadn't seen that story but it provides a great behind the scenes look at how this service works.

    So there is an EIC and they add their opinion to what stories get the front page coverage. Thats pretty much how every news media source operates so Apple adding their own layer on top of things doesn't really bother me.

    The article clearly states:
    "Not all of the stories in Apple News are handpicked. Algorithms still deliver stories based on which new sources or topics users have followed, such as sports, cars or entertainment. Algorithms also pick the five prominent “trending” stories below Ms. Kern’s team’s curated stories."

    I'm sure there are still many out there that think companies providing news operate out of some noble obligation to be unbiased and objective and somehow manage to stay in business without profit driving them but the reality is nothing is free. Educating yourself about how the world works is on you and those smart enough to not take what is spoon fed and look further into stories that interest them will do so. Unfortunately most people are lazy and expect to just be able to click and swipe their way to knowing the truth of what is going on in the world. At least with this service, if you trust Apple's brand, you have some comfort in knowing what to expect from this.
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