Gaming Giant Takes a Hit: Electronic Arts’ Stock Plummets
A Sudden Shift in Fortune
In a shocking turn of events, shares of Electronic Arts (EA) are on track to experience their steepest decline since 1999. The video game publisher’s decision to cut its full-year bookings guidance has sent its stock tumbling 19% to $115.86 as of mid-day Thursday. This drastic drop would mark the company’s worst day on the market since the dot-com bubble and its third-biggest decline since going public in 1990.
Disappointing Earnings Report
For the fiscal third quarter, which ended December 31, EA expects to report approximately $2.215 billion in net bookings, significantly lower than its previous guidance of $2.4 billion to $2.55 billion. Revenue for the December quarter came in at about $1.88 billion, with $1.11 in diluted earnings per share. The company attributed the underperformance to its “Dragon Age” and EA Sports FC franchises.
Weakness in Global Football Franchises
Analysts at Roth MKM described the earnings pre-announcement as a “big stumble,” citing weakness in the Global Football franchises. EA’s deal with FIFA ended in 2022, and the company has since rebranded its soccer games as EA Sports FC. The franchise’s performance has been lackluster, contributing to the majority of the live services shortfall.
Role-Playing Game “Dragon Age” Falls Short
The company’s role-playing game “Dragon Age” also failed to meet expectations, with only 1.5 million players during the quarter – 50% below projections. EA anticipates Global Football sales to decline year-over-year and expects bookings from online sales to decrease in fiscal 2025.
Full Third-Quarter Results Awaited
EA plans to release its full third-quarter results on February 4. The company’s revised guidance for the full fiscal year, ending March 31, now stands at between $7 billion and $7.15 billion, down from its previous estimate of $7.5 billion to $7.8 billion.
A Challenging Road Ahead
As EA navigates these challenges, investors will be closely watching the company’s next moves. With its stock taking a significant hit, EA must regroup and refocus its efforts to regain momentum in the competitive gaming industry.
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