Munster Says Under-The-Radar Apple TV+ Will Contribute 20% Of Cupertino's Net Income Growth

Apple Inc.'s AAPL streaming service Apple TV+, which is part of the Services segment and was launched November 2019, should be on the radar of investors, according to Gene Munster of Loup Ventures. 

Stay-At-Home Boost For Apple TV+: The stay-at-home'orders that boosted Netflix Inc's NFLX paid member growth by 64% is also benefiting Apple TV+ growth, Munster said in a note.

Although the stay-at-home tailwind is short-lived, the long-term outlook for streaming services remains favorable, the research analyst-turned-venture capitalist said. 

At its one-year anniversary mark in November, Apple TV+ will have about 40 million to 50 million active subscribers and less than 5 million paid subscribers, according to Munster's estimates.  

Rotten Tomatoes and IMDb both ranked Apple TV+ in line with other streaming services, he said. 

Apple's Momentum In Content Growth: Although Apple has no set targets for shows and movies added to the service, it has been adding marquee content monthly, Munster said. 

The analyst sees Apple winning the competitive bid for the rights to stream the upcoming Tom Hanks WWII film "Greyhound"  as another sign its content library should gain critical mass.

"In the future, we expect similar high profile content wins for Apple," he said. 

The Forward Outlook For Apple TV+ Assuming a 20% activation rate, Munster said he expects Apple TV+ revenue to reach $1.2 billion in fiscal year 2022, or less than 1% of Apple's total revenue.

The venture capitalist estimates the service will contribute to $1.2 billion in net income or 1.7% of Apple's total net income.

"More importantly, Apple TV+ will account for about 20% of net income growth during that period," he said.

AAPL Price Action: At last check, Apple shares were edging 0.16% higher to $332.04. 

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