Tencent Music Entertainment Group (NYSE:TME) & Spotify Technology (NYSE:SPOT) Critical Survey

Tencent Music Entertainment Group (NYSE:TME) and Spotify Technology (NYSE:SPOT) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Institutional & Insider Ownership

5.7% of Tencent Music Entertainment Group shares are held by institutional investors. Comparatively, 45.4% of Spotify Technology shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Tencent Music Entertainment Group and Spotify Technology, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tencent Music Entertainment Group 0 5 8 0 2.62
Spotify Technology 1 0 3 0 2.50

Tencent Music Entertainment Group presently has a consensus target price of $16.02, suggesting a potential upside of 0.89%. Spotify Technology has a consensus target price of $172.33, suggesting a potential upside of 13.78%. Given Spotify Technology’s higher possible upside, analysts plainly believe Spotify Technology is more favorable than Tencent Music Entertainment Group.

Profitability

This table compares Tencent Music Entertainment Group and Spotify Technology’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tencent Music Entertainment Group N/A N/A N/A
Spotify Technology -1.08% 13.72% 5.62%

Earnings & Valuation

This table compares Tencent Music Entertainment Group 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
Tencent Music Entertainment Group $2.76 billion 9.41 $276.97 million $0.20 79.40
Spotify Technology $6.21 billion 4.34 -$92.11 million ($0.60) -252.43

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

Summary

Tencent Music Entertainment Group beats Spotify Technology on 7 of the 12 factors compared between the two stocks.

About Tencent Music Entertainment Group

Tencent Music Entertainment Group operates an online music entertainment platform that provides online music and music-centric social entertainment services in China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover and listen to music in personalized ways; and WeSing, which enables users to have fun by singing and interacting with friends, sharing their singing performances with friends, and discovering songs that others have sung. The company also operates Kugou Live and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with those interested in their performance. In addition, it sells music-related merchandise, including Kugou M1 headsets, smart speakers, WeSing karaoke microphones, and Hi-Fi systems; and offers online music event ticketing services, as well as services to smart device and automobile makers to build and operate music services on devices and vehicles. The company was formerly known as China Music Corporation. The company was incorporated in 2012 and is based in Shenzhen, Chiane. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.

About Spotify Technology

Spotify Technology S.A., together with its subsidiaries, provides music streaming services worldwide. It operates through two segments, Premium and Ad-Supported. The Premium segment offers commercial-free music services to subscribers comprising unlimited online and offline high-quality streaming access to its catalog. The Ad-Supported segment provides ad-supported users with limited on-demand online access to its catalog. As of December 31, 2018, the company's platform included 207 million monthly active users and 96 million premium subscribers in approximately 78 countries and territories. Spotify Technology S.A. was founded in 2006 and is based in Luxembourg City, Luxembourg.

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