New York Times Shares Drop As Digital Subscription Sales Slow

Shares of the New York Times NYT Co. fell nearly 3% Wednesday after the newspaper publisher reported its slowest growth in digital subscription sales in more than a year. Wall Street, though, remain bullish on the stock, at least for now.

First-quarter, net income rose 25 % to $41.1 million, or 24 cents per share, compared with $32.9 million, or 20 cents, a year earlier. Revenue jumped nearly 7% to $473 million.  Excluding one-time items, the profit was 26 cents. On that basis, Wall Street analysts expected the Times to earn 14 cents on sales of $463.3 million.

 As of  April 30, the Times had more than 7.8 million paid subscribers for the company’s print and online products. The Times added 301,000 net new digital subscriptions in the first quarter. More than half of the online sales —167,000 —- were for net new digital news subscriptions.

“There is no doubt that the news cycles of the last five years, capped by last year’s tumultuous presidential election, racial reckoning, and the Covid-19 pandemic, created unprecedented demand for Times journalism and therefore accelerated subscription growth,” Chief Executive Meredith Kopit Levien said during the company’s earnings conference call. “While we don't know which storylines will drive the next big news cycle, we do know that the size of our newsroom, its range of expertise, and our continued investment in

The Times was one of the first publishers to charge readers for online content. At the time, critics argued that the Times’s plan was short-sited.  The Times is now poised to hit its goal of ten million subscriptions by 2025. meeting more needs position us to capture that demand, whatever its source.” 

Like other newspaper publishers, however,  the Times is still dependent on print editions, though to a lesser extent than during the past. According to the company, print advertising revenue slumped 32% in the quarter because of declines in the luxury and travel categories.  Print circulation revenue fell 4% as is single copy and international bulk sales slumped.

Going forward, the company expects total subscription revenues in the second quarter to increase approximately 15% on a year-over-year basis. Digital-only subscription sales will increase about 30%. Advertising revenue is expected to soar by as much as 60% in the quarter and rise between 70% and 75% compared with a year earlier when the pandemic hurt results.

“Our first-quarter results also reflect a real improvement in digital advertising,” Levien said. That improvement was driven by a brisk market and our work last year on refining the competitiveness of our offering and the margin profile of our business. Digital advertising growth over Q1 in both 2020 and 2019 demonstrates the advantage of our subscription-first strategy to our advertising business.”

Shares of NYT recently changed hands at $43.74, a decline of about 3%. They have slumped more than 12% since January. Wall Street analysts have a bullish outlook on the stock.  Their average 52-week target on NYT is $56.50, indicating a potential upside of more than 32% over where it currently trades