The SpaceX IPO is a trap (From Behind the Markets)

At the end of 2025, Berkshire Hathaway (NYSE: BRK.B), formerly headed by the legendary Warren Buffett, made an interesting portfolio move. The company’s 13F filing revealed that it entered a new stock during the quarter, placing a $352 million bet. That stock was The New York Times (NYSE: NYT), a name many likely did not expect.

Given that one of the world’s most renowned investment funds has taken a stake in the firm, The New York Times is a stock worth examining. Overall, NYT has a lot going for it today, but it also has notable risks worth considering.

Understanding The New York Times’ Digital Transformation

The New York Times' business needs little introduction; it is one of the longest-standing and most universally known news organizations in the world. However, it is worth understanding how the company has shifted its business in the recent past.

It is no secret that the traditional print newspaper industry is in structural decline. Notably, from 2021 to 2025, NYT’s print subscribers fell from 795,000 to 570,000. However, the company has been fairly successful in transitioning away from print and toward digital over the past several years. While print subscribers dropped 28% from 2021 to 2025, digital-only subscribers increased by 80% from 6.783 million to 12.21 million.

Today, digital channels are the dominant force behind NYT’s revenue. Digital subscriptions and digital advertising made up approximately two-thirds of the company’s total revenue over the last 12 months (LTM). Revenue from these streams was approximately $1.92 billion, compared to total revenue near $2.9 billion.

While declining, print still represents a significant source of sales. LTM print subscription and print advertising revenue were around $677 million, good for 23% of total sales. Other Services revenue accounted for just under 11% of LTM total sales. Here, the company licenses its intellectual property, engages in affiliate marketing, and uses excess printing capacity to aid third-party distribution needs.

Digital and Other Services have been notable growth drivers, offsetting the decline in print. Total Digital revenue rose 70% from 2021 to 2025, and Other Services revenue rose around 43%. This helped total revenue rise 36%.

Since the end of 2021, NYT shares are up approximately 70%, moderately above the S&P 500’s 64% return over the same period. Overall, these metrics provide evidence that NYT is far from a dead company, but rather one evolving to a changing world.

The New York Times Wins in Q1

NYT’s latest earnings report was strong. Quarterly sales increased by 12% year over year (YOY) to $712.2 million, solidly ahead of estimates near $700 million. Notably, adjusted earnings per share (EPS) increased much faster at 49% YOY to 61 cents. This was well ahead of estimates, with analysts forecasting 49 cents, demonstrating significant operating leverage in the business.

NYT’s adjusted operating profit (AOP) margin moved up considerably by 200 basis points YOY to 16.6%. The firm also lowered its diluted share count by around 0.7% YOY and holds $291.2 million worth of buyback capacity.

NYT’s Q2 guidance points to continued growth and margin expansion ahead on a YOY basis. It sees total subscription revenue rising by 9% to 11%, and total advertising revenue rising by “low double digits." Meanwhile, NYT projects that adjusted operating costs will rise by just 8% to 9%.

The company notes, “We continue to expect 2026 to be another year of healthy growth in revenues and AOP, margin expansion, and strong free cash flow generation." The stock saw a meaningful 8% boost after its earnings report.

Importantly, the firm’s growth is accelerating, rather than tapering off. Its 12% growth last quarter was the highest since Q4 2022, and a big improvement over 7% growth in Q1 2025. Additionally, LTM free cash flow increased by a very healthy 28% YOY to $542 million.

News Takes a Backseat: A Concerning Indicator

In general, the metrics outlined above paint an encouraging story for NYT. However, there is one key blemish on the firm’s recent history. While NYT is most known for news journalism, this isn’t where the company is growing. At the end of 2025, NYT’s news-only subscribers were just 1.47 million, down 24% YOY.

Instead, bundled and other single-product subscriptions are driving growth. Other single products include The Athletic, Audio, Cooking, Games, and Wirecutter. Here, subscribers rose 24% YOY to 4.27 million. Bundled plans contain subscriptions to two or more products, and may or may not include a news subscription. Bundled rose 19% YOY.

Thus, interest in what many would consider NYT’s biggest strength: news, appears to be on the decline, while other products are winning customers. One reason for this may be the emergence of artificial intelligence (AI).

Rather than searching for news on Google and then finding NYT, products like AI Overviews can give people information without having to read an entire article. It’s worth questioning whether AI advancements could erode the company’s other product lines over time.

New York Times: Berkshire Plants Its Flag in the Ground

There are many strong metrics supporting NYT’s business, which Berkshire likely identified. However, declining interest in news coverage is a crack below the surface. In this context, there is significant uncertainty about the stock’s outlook.

Taking a bullish stance requires conviction that interest in its non-news products remains strong long-term, or that news interest makes a comeback. Berkshire’s investment indicates a belief that one or both of these outcomes will play out.

Uncertainty shows up through the wide range of analyst price targets on NYT. Targets updated after the company’s latest report range as high as $95, and as low as $66. The average of updated targets was around $83, moderately above the MarketBeat consensus target near $81. This updated average implies upside of less than 10%.

Read this article online ›