The New York Times stock continued its strong downward trend, reaching its lowest level since August 13. It dropped to $63.52, down by over 24% from its highest point this year, with its valuation falling from a record high of $13.9 billion to $10.5 billion. Is this drop a good buying opportunity?
New York Times business is doing well despite headwinds
NYT stock remained under pressure this week as its business faces some major headwinds. One of the key challenge is that traffic to its website dropped by 1.5% in August to 618 million. This traffic still makes it the biggest platform in its industry, with Washington Post attracting 64.8 million visitors. The Guardian, BBC, and CNN had 284 million, 429 million, and 313 million visitors, respectively.
The most recent results showed that its business continued doing well, with its revenue growth continued growing. This growth was driven by its digital-only subscription business and offset by a drop in its print division.
Its digital-only subscription revenue jumped by 16.4% in the second quarter as it added 280k net digital-only customers. This growth also helped its digital advertising revenues rose by 20.7% during the quarter.
The only challenge, however, is that its costs continued rising, which had an impact on its profitability. Its operating costs jumped by 11.2% because of its higher compensation and benefits expenses. Its operating profit rose to $118 million.
Analysts expect the company’s business will continue to do well even in the era of artificial intelligence. That’s because demand for quality original news will remain in the future.
The average estimate among analysts is that its quarterly revenue will rise by 9.43% to $766 million. Its earnings-per-share is also expected to rise to 65 cents from 59 cents in the same period last year. For the year, the revenue is expected to jump by 10% to $3.11 billion, helped by President Trump and midterm election coverage.
The recent estimates among analysts were relatively strong. Guggenheim’s Curry Baker hiked his rating from neutral to buy with his target moving from $70 to $82. Evercore ISI Group’s rating remained at outperform, with the target being $85.
Other analysts who are highly bullish on the company are from Barclays, Bank of America, and JPMorgan. Warren Buffett’s Berkshire Hathaway has also taken a large stake in the company.
NYT stock price technical analysis
NYT stock chart | Source: TradingView
The daily chart shows that the NYT stock has slumped from a high of $86 to a low of $63.52 today. This retreat has seen it drop below the 50-day moving average, a sign that bears have prevailed.
On the positive side, the stock has formed a double-bottom pattern whose neckline is at $73.41, its highest point on September 14. It is also aligns with the 50% Fibonacci Retracement level.
Therefore, the stock will likely bounce back in the coming days. If this happens, it may retest the psychological level of $70. On the other hand, a drop below the support level of $63.5 will invalidate the bullish outlook.
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