Spotify vs. Netflix: Which Streaming Stock to Bet on for the Next 5 Years?
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Spotify vs. Netflix: Which Streaming Stock to Bet on?
Spotify and Netflix have recently reported contrasting quarters, raising questions about their future strategies and growth potential.
By Vandita Jadeja
Published: September 12, 2026, 10:30 AM ET • 3 min read
Spotify hit 300 million subscribers with projected gross margins targeting 35-40% by 2030, while Netflix reported a 33.4% operating margin and anticipated ad revenue to double to $3 billion in 2026.
Key Differences:
- Business Model: Spotify focuses on "subscriptions on top of subscriptions" with diversifying revenue streams, while Netflix emphasizes spend-to-scale with a focus on ads.
- Operating Leverage: Spotify has achieved operating leverage by keeping headcount flat for three years, while Netflix's strategy involves significant spending.
- Market Cap: Down 26% over the past year at $107 billion, Spotify offers more asymmetric upside compared to Netflix's $317 billion valuation.
Spotify's Strengths:
- Premium-focused business with a strong margin.
- Diversifying revenue streams, including Audiobooks+ and Reserved ticketing.
- Impressive operating leverage with revenue per employee doubling.
Netflix's Strengths:
- Strong ad revenue growth, expected to double in 2026.
- Global expansion, with significant growth in Latin America.
- Scale advantage in the video streaming market.
Conclusion:
Given its unique value proposition, operating leverage, and potential for margin expansion, Spotify presents a compelling case for investment in the streaming space over Netflix.