The earnings impact isn't nothing.
News broke this week that Apple TV + could launch this November at potentially $9.99 a month for subscribers. Apple (AAPL) - Get Report is also reportedly lifting its entertainment streaming content spend from $1 billion to $6 billion, which analysts and investors think shows Apple is dipping its toe in the water before finding its way in the entertainment streaming business.
For every 10 million Apple TV + subscribers, 20 to 25 cents could be added to earnings per share, according to Cowen analyst Krish Sankar. This assumes a $9.99 monthly price, Sankar clarified in his note out Tuesday evening. The $9.99 is slightly aggressive when compared with the expected $6.99 per month launch of Disney's (DIS) - Get Report Disney Plus. Sankar's earnings analysis was done "conservatively," he said.
Sankar expected Apple to add 21 million Apple TV + subscribers in 2021, which by his math, would equate to 42 cents to 53 cents in added EPS for 2021. Analysts polled by FactSet are looking for 2021 EPS to come in at $16.17 on an adjusted basis, so 53 cents would imply an added 3.17% to Apple's bottom line.
Still, "Spending $6 billion more suggests that [entertainment content is] a serious hobby instead of just a hobby," D.A. Davison & Co. analyst Tom Forte told The Street. "We're still trying to gauge for Apple if this is a full-time job."
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