Keep an Eye on Netflix and Spotify
Both Netflix and Spotify deserve close monitoring. From Wall Street’s perspective, something is wrong with the companies. On a combined basis, Netflix’s and Spotify’s market caps have declined by 35% or $250 billion from peak levels. The move especially stands out relative to continued momentum that has flowed to Big Tech companies.
Wall Street trading behavior rarely tells the full story as the market is known to misprice business fundamentals. With that said, the broader stories surrounding Netflix’s and Spotify’s businesses do seem to have entered new chapters. At a time when Big Tech is seeing accelerated revenue growth, Netflix and Spotify are experiencing slowing revenue growth. Netflix management forecasts 13% revenue growth in 2026, down from 16% in 2024 and 2025. Excluding FX, Spotify revenue growth has declined from 20% to 15% over the past two years. For services companies generating nearly all their revenue from recurring streams, slowing revenue growth shouldn’t be brushed aside. To put those growth rates into perspective, Apple will report nearly 7x more revenue in 2026 compared to Netflix and Spotify on a combined basis while reporting stronger revenue growth (17%).
A major driver behind Netflix’s and Spotify’s slowing revenue growth is maturing paid subscriber growth. Netflix’s paid subscriber growth (net basis) was nearly cut in half from 42 million in 2024 to approximately 25 million in 2025. Spotify’s paid subscriber growth (net basis) has fared better, remaining relatively steady between 25 million and 30 million annually. However, given Spotify’s ballooning free user tally and
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