Spotify vs Netflix: Mark Mahaney picks a side

Mark Mahaney says he prefers Spotify stock over Netflix Inc.
The Evercore ISI expert explained why on CNBC's "Closing Bell".
Spotify is down more than 50% YTD; Netflix is down over 65%.

Spotify Technology SA (NYSE: SPOT) sure is one of the hardest hit stocks this year. Still, Mark Mahaney says it hasn’t hit the Netflix Inc (NASDAQ: NFLX) wall “yet”.

Mahaney prefers Spotify over Netflix

The Evercore ISI Head of Internet Research has more than one reason why the beaten down Spotify is a better pick than the beaten down Netflix right now. On CNBC’s “Closing Bell”, he said:

In its second investor day on Wednesday, the media services company committed to improving its gross margin to 30% over the next three years.

Why else is SPOT superior to NFLX?

In April, Spotify reported market-beating results for its fiscal Q1. According to Mahaney, the Swedish company is also superior to Netflix in terms of sources of revenue. He noted:

CEO Daniel Ek also confirmed on Wednesday that Spotify will “aggressively” expand into audiobooks to grow its userbase. Wall Street, on average, sees a 30% upside in SPOT.