Spotify Technology (NYSE:SPOT) vs. Take-Two Interactive Software (NASDAQ:TTWO) Financial Analysis

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

Volatility & Risk

Take-Two Interactive Software has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500. Comparatively, Spotify Technology has a beta of 1.58, indicating that its share price is 58% more volatile than the S&P 500.

Profitability

This table compares Take-Two Interactive Software and Spotify Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Take-Two Interactive Software	-4.79%	12.25%	4.46%
Spotify Technology	18.44%	41.39%	23.78%

Institutional & Insider Ownership

95.5% of Take-Two Interactive Software shares are owned by institutional investors. Comparatively, 84.1% of Spotify Technology shares are owned by institutional investors. 1.1% of Take-Two Interactive Software shares are owned by insiders. Comparatively, 0.4% of Spotify Technology shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Take-Two Interactive Software and Spotify Technology, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Take-Two Interactive Software	1	0	19	2	3.00
Spotify Technology	0	6	17	2	2.84

Take-Two Interactive Software presently has a consensus price target of $296.95, indicating a potential upside of 23.92%. Spotify Technology has a consensus price target of $609.05, indicating a potential upside of 14.15%. Given Take-Two Interactive Software’s stronger consensus rating and higher possible upside, analysts plainly believe Take-Two Interactive Software is more favorable than Spotify Technology.

Earnings and Valuation

This table compares Take-Two Interactive Software 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
Take-Two Interactive Software	$6.66 billion	6.73	-$298.20 million	($1.73)	-138.51
Spotify Technology	$19.44 billion	5.65	$2.50 billion	$16.06	33.22

Spotify Technology has higher revenue and earnings than Take-Two Interactive Software. Take-Two Interactive Software 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 Take-Two Interactive Software on 8 of the 14 factors compared between the two stocks.

About Take-Two Interactive Software

Take-Two Interactive Software, Inc. develops, publishes, and markets interactive entertainment solutions for consumers worldwide. It develops and publishes action/adventure products under the Grand Theft Auto, LA Noire, Max Payne, Midnight Club, and Red Dead Redemption names, as well as other franchises. The company also publishes various entertainment properties across various platforms and a range of genres, such as shooter, action, role-playing, strategy, sports, and family/casual entertainment under the BioShock, Mafia, Sid Meier’s Civilization, XCOM series, Borderlands, and Tiny Tina’s Wonderland names. In addition, it publishes sports simulation titles comprising NBA 2K series, a basketball video game; the WWE 2K professional wrestling series; mobile titles, including WWE SuperCard; and PGA TOUR 2K. Further, the company offers Kerbal Space Program and OlliOlli World; free-to-play mobile games, such as CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Golf Rival, Harry Potter: Puzzles & Spells, Match Factory!, Merge Dragons!, Merge Magic!, Monster Legends, Toon Blast, Top Eleven, Top Troops, Toy Blast, Two Dots, Words With Friends, and Zynga Poker; and hyper-casual mobile titles, including Fill the Fridge!, Parking Jam 3D, Power Slap, Pull the Pin, Twisted Tangle, and Tangled Snakes. Its products are designed for console gaming systems; personal computers; and mobiles comprising smartphones and tablets. The company provides its products through physical retail, digital download, online platforms, and cloud streaming services. Take-Two Interactive Software, Inc. was incorporated in 1993 and is based in New York, New York.

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.