With a market cap of $37.5 billion, Electronic Arts, Inc. (EA) is a leading developer, marketer, publisher, and distributor of interactive games like Dead Space, Star Wars Jedi, Titanfall, etc. Based in California, EA distributes its content through multiple channels, including online portals like Origin and Play4Free. Its games are also available on consoles, PCs, mobile devices, tablets, and e-readers. The company operates through three divisions: EA Studios; Maxis; and EA Mobile.
Companies valued at $10 billion or more are generally classified as “large-cap” stocks, and Electronic Arts fits this criterion perfectly, signifying its measurable size, stability, and influence in the gaming industry. With its wide-scale market presence and consistent solid financial performance, Electronic Arts has established itself as a key player in the industry. Its success also stems from strong brand recognition, an extensive developer network, access to licensed content and franchises, and a commitment to innovation and quality in game development.
Despite slipping 2.7% from its 52-week high of $144.53, set on February 15, the prominent game publisher’s stock has gained 7.7% over the past three months, slightly outpacing the Vaneck Video Gaming And Esports ETF’s (ESPO) 6.5% surge during the same period.
But it's not all sunshine and rainbows for EA stock. In the longer term, EA has increased by 3.1% on a YTD basis, lagging behind the ESPO’s 17.2% rise. Over the past 52 weeks, Electronic Arts has surged 11.3%, underperforming ESPO’s 22.6% rise over the same period.
However, since late May, EA has traded above its 50-day and 200-day moving averages, suggesting a bullish price trend.
Electronic Arts' lackluster price performance in 2024 is primarily attributed to macroeconomic challenges and soaring inflation rates. However, in its Q4 earnings release, the video game giant announced an exciting lineup of new experiences, beginning with College Football in fiscal 2025, aiming to drive accelerated growth in fiscal 2026 and beyond.
But the stock fell about 4.1% in the two trading sessions following its Q4 earnings release on May 7. Although the company posted $1.8 billion in revenue and reported a profit of $0.67 per share, a significant improvement from a loss of $0.04 per share in the year-ago quarter, investor sentiment soured as both figures fell short of Wall Street's expectations. Additionally, the company's fiscal 2025 revenue outlook of $7.1 billion to $7.5 billion and projected EPS range of $3.34 to $4 were below analyst forecasts, contributing to the stock's decline.
Electronic Arts’ rival Take-Two Interactive Software, Inc. (TTWO), has underperformed EA, falling 1.7% on a YTD basis but gaining 10.3% over the past 52 weeks, slightly underperforming EA stock.
Furthermore, analysts are cautiously optimistic about the stock's prospects. The stock has a consensus rating of “Moderate Buy” from the 24 analysts covering it, and the mean price target of $149.17 represents a premium of 6.1% from the prevailing price levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
