Electronic Arts Inc. (EA), based in Redwood City, California, is a leading developer and publisher of games across consoles, PCs, mobile devices, and tablets. With a market capitalization of $36.2 billion, EA also generates revenue through advertising and licensing agreements, allowing third parties to distribute and host its games.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and EA perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the electronic gaming & multimedia industry. It leverages its strong brand portfolio, including franchises like Madden, Battlefield, and Apex Legends, to drive customer loyalty and recurring revenue. The company's strategic shift toward live services and digital distribution enhances engagement and ensures a steady revenue stream beyond initial game sales.
Despite its notable strength, EA slipped 15.2% from its 52-week high of $168.50, achieved on Nov. 22. Over the past three months, EA stock has declined 7.7%, underperforming the broader Dow Jones Industrial Average’s ($DOWI) 3.7% fall during the same time frame.
Over the past six months, shares of EA have surged marginally and climbed 6.4% over the past 52 weeks. $DOWI has also returned marginal gains over the past six months but has surpassed EA over the past year slightly with an 8.1% rally.
While EA has been trading above its 50-day moving average recently, it has been moving under its 200-day moving average since early January.
On Feb. 4, EA announced its third-quarter earnings, and its shares popped more than 7% in the next trading session. The company posted net revenue of $1.9 billion and net bookings of approximately $2.2 billion for the quarter. However, adjusted EPS fell short of expectations due to the lower-than-expected engagement in EA's soccer-themed video games.
In response to these challenges, EA revised its fiscal year outlook downward, now anticipating net bookings between $7.25 billion and $7.4 billion, down from the previous range of $7.5 billion to $7.8 billion. The company also announced a $1 billion share repurchase plan, reflecting confidence in its long-term growth prospects.
EA’s rival, Roblox Corporation (RBLX), has surpassed, with shares rising 24.6% over the past six months and a 45.2% rise over the past 52 weeks.
Wall Street analysts are reasinably bullish on EA’s prospects. The stock has a consensus “Moderate Buy” rating from the 26 analysts covering it, and the mean price target of $143.80 suggests a marginal potential upside from current 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.
