Netflix (NASDAQ:NFLX | NFLX Price Prediction) reported first quarter earnings on April 16, while Spotify (NYSE:SPOT) last reported Q4 2025 results in February. Both are subscription-and-advertising businesses at turning points.
Netflix walked away from a major acquisition. Spotify installed new leadership. The contrast in execution, scale, and strategy matters for investors now. If you’ve $1,000 to invest, here’s the right stock.
Ad Tiers Carry Netflix. Premium Subscribers Carry Spotify.
Netflix delivered $12.25 billion in Q1 2026 revenue, up 16.19% year over year, beating estimates, the ad-supported tier represented over 60% of all sign-ups in ads markets, and advertiser count grew 70% year over year to over 4,000 clients. Asia Pacific grew fastest at 20% year over year, with Japan becoming the largest contributor to member growth after the World Baseball Classic became the most-watched Netflix program ever in Japan.
EPS of $1.23 missed the estimate of $1.345, though net income was inflated by a $2.8 billion Warner Bros. termination fee after Netflix walked away from the acquisition. Underlying earnings look more modest without that gain.
| Business Driver | Netflix (Q1 2026) | Spotify (Q4 2025) |
|---|---|---|
| Revenue | $12.25B (+16.2% YoY) | $4.53B (+6.81% YoY) |
| Primary Growth Engine | Ad-supported tier (60%+ of sign-ups) | Premium subscribers (751M MAUs) |
| Operating Income | $3.957B (+18.23% YoY) | $701M (+46.96% YoY) |
| Market Cap | ~$451B | ~$109B |
Spotify’s Q4 2025 told a different story. Premium subscribers drove results: premium revenue reached $4.013 billion, up 8% year over year, while ad-supported revenue fell 4% to $518 million on a reported basis due to FX headwinds.
EPS of $4.43 exceeded the estimate of $2.84. Gross margin reached a record 33.1%, and MAUs hit 751 million, adding 38 million in the quarter against guidance of 32 million. Spotify’s advertising business is structurally weaker than Netflix’s, but its subscriber engine is strong.
Content Empire vs. Audio Platform Expanding
Netflix is betting on breadth. It acquired InterPositive, Ben Affleck’s GenAI filmmaking tools company, launched a standalone kids gaming app called Netflix Playground, and is building video podcasts alongside live sports like the Tyson Fury vs. Anthony Joshua fight.
Spotify is pushing deeper into audio verticals. It expanded lossless audio to over 50 markets, rolled out music videos in beta across 111 markets, and launched the AI-powered Prompted Playlist feature for premium users. Audiobooks now reach Nordic markets. The Spotify Partner Program monetizes video podcast creators through audience-driven payouts.
The platform is widening, but the leadership transition adds uncertainty: Daniel Ek stepped down as CEO on December 31, 2025, replaced by co-CEOs Alex Norström and Gustav Söderström. This is Spotify’s first earnings cycle without its founder leading.
The Next Test Is Advertising Credibility
Netflix has set a clear target: roughly $3 billion in advertising revenue for full-year 2026, up approximately 2x year over year. With full-year revenue guidance reaffirmed at $50.7 billion to $51.7 billion and a 2026 operating margin target of 31.5%, the financial framework is clear.
Watch whether advertiser retention holds as Netflix raises prices and whether live events generate real engagement or just one-off spikes.
Spotify’s ad revenue declined on a reported basis last quarter, and FX headwinds of roughly 670 basis points are expected in Q1 2026, steeper than the 580 bps in Q4.
Watch whether the new Spotify Ad Exchange and programmatic channels stabilize ad revenue when the company reports Q1 2026 results later this month. Analysts are broadly optimistic: 35 buy ratings with no sell ratings and a consensus price target of $648.91 signal confidence, but that needs Q1 validation under new leadership.
Why Netflix Looks Better Positioned
Netflix’s scale advantage is real. A $451 billion market cap against Spotify’s $109 billion reflects how much further Netflix has progressed in monetization. The stock is up 14.96% year to date, while Spotify has declined 8.48% year to date. Netflix carries a trailing P/E of roughly 42x versus Spotify at roughly 42x, so valuation alone does not separate them. What separates them is execution clarity.
Netflix has reaffirmed guidance, raised free cash flow targets to approximately $12.5 billion for 2026, and is growing advertising from a position of content strength.
Spotify’s margin expansion story is compelling, but a leadership transition and FX pressure create near-term noise. Netflix’s guidance reaffirmation, advertising growth trajectory, and free cash flow targets present a clearer near-term financial picture. If Spotify’s Q1 results confirm MAU growth above 750 million and ad revenue stabilizes, the case for Spotify as a catch-up trade becomes stronger.
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