Electronic Arts Stock Plummets After Q3 Earnings Preannouncement

Major setback for Electronic Arts as shares plunge post-earnings. Analysts projected $1.15 EPS, but EA reports only $1.11, leading to significant stock decline amid a revenue shortfall.

Date: 23-01-2025

AI Rating: 4

Current Earnings Per Share (EPS): The report indicates that Electronic Arts (EA) was expected to report earnings of $1.15 per share for fiscal Q3, but it preannounced that the actual figure will be only $1.11. This is below the expectations set by Wall Street analysts and reflects poorly on the company's performance.

Revenue Growth: EA's guidance for live services net bookings has shifted from anticipated mid-single-digit growth to a mid-single-digit decline. This downturn was attributed to a decrease in bookings for its popular Global Football franchise and a significant shortfall in expected players for the Dragon Age games. This lack of anticipated growth could result in less investor confidence and negatively impact stock prices.

Net Income: EA now projects net revenue for Q3 to be about $1.88 billion, which is also lower than the market expectations set at $2.33 billion. This missed revenue estimate directly correlates with declines in player engagement and revenue sources.

Market Performance: Despite the negative earnings forecast, EA's current stock valuation may remain high, costing around 30 times trailing earnings. This could suggest that the stock is overpriced given the weakening sales outlook, potentially leading to a further drop in stock price as investors reassess its value in light of the company’s struggles.

Stocks: EA