Reservoir Media (NASDAQ:RSVR) vs. Spotify Technology (NYSE:SPOT) Critical Review

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

Risk and Volatility

Spotify Technology has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500. Comparatively, Reservoir Media has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Spotify Technology and Reservoir Media, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Spotify Technology	0	6	17	1	2.79
Reservoir Media	0	3	0	0	2.00

Spotify Technology presently has a consensus target price of $594.50, indicating a potential upside of 16.77%. Given Spotify Technology’s stronger consensus rating and higher possible upside, research analysts clearly believe Spotify Technology is more favorable than Reservoir Media.

Insider & Institutional Ownership

84.1% of Spotify Technology shares are owned by institutional investors. Comparatively, 44.4% of Reservoir Media shares are owned by institutional investors. 0.4% of Spotify Technology shares are owned by company insiders. Comparatively, 26.0% of Reservoir Media shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Spotify Technology and Reservoir Media”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Spotify Technology	$19.44 billion	5.39	$2.50 billion	$16.06	31.70
Reservoir Media	$175.66 million	3.51	$8.30 million	$0.13	72.08

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Spotify Technology	18.44%	41.39%	23.78%
Reservoir Media	4.87%	2.33%	0.94%

Summary

Spotify Technology beats Reservoir Media on 13 of the 15 factors compared between the two stocks.

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.

About Reservoir Media

Reservoir Media, Inc. operates as a music publishing company. It operates through two segments, Music Publishing and Recorded Music. The Music Publishing segment acquires interests in music catalogs, as well as signs songwriters. The Recorded Music segment engages in the acquisition of sound recording catalogs; discovery and development of recording artists; and marketing, distribution, sale, and licensing of the music catalogs. The company was founded in 2007 and is headquartered in New York, New York.