New York Times: A Buy Amidst Political Controversy

Current Changes in Advertising Models Will Result in Better Engagement

In November 2019, the company predicted a drop in advertising revenue as it updates its mobile advertising model. Beginning this month, the paper will stop the automated selling of its ad space on its mobile apps. This prediction sent share prices down around 9%. However, the announcement eclipsed more positive news showing an increase of 273,000 in digital subscribers for a total of approximately 4 million.

In fact, Mark Thompson, president, and CEO of the company stated he was very encouraged by the company's growth in subscriptions. The news organization has a total of 4.9 million subscriptions, and it expects to reach 10 million total subscriptions by 2025. Readership is expanding outside of the U.S. as well, and the NYT has over 500,000 international subscriptions. The company expects that number to grow to over 2 million by 2025. The international market for U.S. news gives the NYT more opportunities to expand its offerings and increase subscriptions.

In addition, the news organization now discourages anonymous users by requiring them to register with an account. This fact will enable the company to encourage deeper engagement with the news content and greater retention rates. The organization will be able to capture more accurate data on key metrics such as total site visits, interactions per visit, bounce rates, and traffic by sources or channels. This will give the company the capability to fine-tune its digital marketing.

Fundamentals Look Strong for the Long Term

Overall NYT revenue increased by 3% despite the 7% decrease in overall advertising revenue. The decrease in advertising revenue, along with their investments in content and digital product development, resulted in a decline in adjusted operating profit to $44 million from $54 million in 2018. Total revenue increased to $428.5 million versus $417.3 million last fiscal year, although this failed to meet the $429.1 million analysts' average estimate.

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Disclosure: I am/we are long NYT.

Disclaimer: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any ...

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