BofA Analyst: Spotify May Be Better Streaming Bet Than Netflix
Following Netflix's (NFLX) stock decline due to weak Q3 guidance, BofA Securities analyst Jessica Reif Ehrlich compares Netflix with Spotify (SPOT), indicating Spotify may be the streaming stock to focus on.
After Netflix (NFLX) shares sank on disappointing third-quarter forecasts, BofA Securities senior media & entertainment analyst Jessica Reif Ehrlich compared Netflix's performance with Spotify (SPOT), suggesting the latter may be the streaming stock investors should focus on.
Recommendation Change
The report did not indicate an official rating change for either stock, but the analyst implicitly favored Spotify over Netflix at this time.
Analyst's Rationale
Ehrlich believes Spotify has stronger subscriber growth momentum and revenue diversification, especially with its expansion into podcasts and audiobooks, while Netflix faces market saturation and increased competition.
Context
The analysis follows Netflix's weak Q3 guidance, which sent its stock down over 10% in recent trading. In contrast, Spotify has shown relatively independent performance from sector volatility.
What to Make of It
The analyst's view is not a buy or sell recommendation, but it highlights divergent outlooks between two streaming companies, which may help investors assess risks and opportunities in the sector.
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