Reviewing Spotify Technology (NYSE:SPOT) and Roblox (NYSE:RBLX)

Roblox (NYSE:RBLX) and Spotify Technology (NYSE:SPOT) are both large-cap communication services companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, institutional ownership, earnings, valuation and profitability.

Profitability

This table compares Roblox and Spotify Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Roblox	-17.60%	-292.85%	-10.13%
Spotify Technology	18.44%	41.39%	23.78%

Volatility and Risk

Roblox has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500. Comparatively, Spotify Technology has a beta of 1.61, meaning that its stock price is 61% more volatile than the S&P 500.

Institutional and Insider Ownership

94.5% of Roblox shares are held by institutional investors. Comparatively, 84.1% of Spotify Technology shares are held by institutional investors. 10.1% of Roblox shares are held by insiders. Comparatively, 0.4% of Spotify Technology shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Roblox and Spotify Technology, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Roblox	5	13	12	1	2.29
Spotify Technology	0	8	23	1	2.78

Roblox currently has a consensus target price of $56.96, suggesting a potential upside of 15.16%. Spotify Technology has a consensus target price of $610.25, suggesting a potential upside of 15.14%. Given Roblox’s higher probable upside, equities analysts plainly believe Roblox is more favorable than Spotify Technology.

Valuation & Earnings

This table compares Roblox and Spotify Technology”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Roblox	$4.89 billion	6.78	-$1.07 billion	($1.43)	-34.59
Spotify Technology	$19.44 billion	5.61	$2.50 billion	$16.06	33.00

Spotify Technology has higher revenue and earnings than Roblox. Roblox is trading at a lower price-to-earnings ratio than Spotify Technology, indicating that it is currently the more affordable of the two stocks.

Summary

Spotify Technology beats Roblox on 10 of the 14 factors compared between the two stocks.

About Roblox

Roblox Corporation develops and operates an online entertainment platform in the United States and internationally. It offers Roblox Studio, a free toolset that allows developers and creators to build, publish, and operate 3D experiences, and other content; Roblox Client, an application that allows users to explore 3D experience; and Roblox Cloud, which provides services and infrastructure that power the platform. Roblox Corporation was incorporated in 2004 and is headquartered in San Mateo, California.

About Spotify Technology

Spotify Technology S.A., together with its subsidiaries, provides audio streaming subscription services worldwide. It operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers. This segment sells directly to the end users. The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its users on their computers, tablets, and compatible mobile devices. The company also offers sales, distribution and marketing, contract research and development, and customer and other support services. Spotify Technology S.A. was incorporated in 2006 and is based in Luxembourg City, Luxembourg.