Apple, he says, has committed to spending $6 billion per year (per year?!) on original movies and TV shows.
The Street’s focus is around gauging the consumer appetite for another content provider with Apple officially entering the ring with the likes of Netflix, Disney, and Hulu among others.
It is a crucial time for Cupertino as it recently launched its trifecta of new smartphones with iPhone 11 strong out of the gates thus far and now looks to convert millions of Apple device users on to its streaming platform. Taking a step back we remind investors of the “show stopping” low price for Apple’s streaming TV service at $4.99 per month taking a major shot at its content competitors with Netflix front and center as clearly Cook & Co. are looking for market share coming out of the gates with this price point that we loudly applaud. In our opinion with an installed base of ~900 million active iPhones worldwide we believe Apple has an opportunity to gain 100 million consumers on the streaming front in the next 3-4 years. We note that Apple is offering Apple TV+ free for a year with the purchase of an Apple device to help stimulate demand for its trifecta of smartphones and build loyalty on the services, which we believe is a smart move.
Apple Full Court Press on Streaming. Apple has a compelling list of new shows coming out as we believe it has committed ~$6 billion annually to the original shows and movies to beef up its streaming content ambitions going forward. This is a significant step up from the $1 billion that was originally believed to be the annual budget as the company tries to keep pace in the content arms race.
Maintains Outperform rating, raises price target to $265 from $245.
My take: With Nov. 1 launch of Apple TV+ just around the corner, at least four analysts have dusted off their Apple spreadsheets so far this week.
- Wedbush’s Ives: Outperform, $265
- Cowan’s Krish Sankar: Outperform, $250
- Longbow’s Shawn Harrison: To Buy, from Neutral, $260.
- T. Michael Walkley: Buy, $260 from $240
UPDATE: Ives and Sankar were just on CNBC.