Electronic Arts Shares Up 3% on Q1 Beat, Provides 2023 Guidance

Electronic Arts (NASDAQ:EA) fell short of Wall Street’s earnings expectations and delivered a weaker-than-anticipated outlook for the fourth quarter. However, investor sentiment remained positive, with shares rising over 2% in pre-market trading Wednesday following the announcement of a $1 billion share repurchase program.

For the third quarter, EA reported earnings per share of $2.83, missing analysts’ projections of $2.88. On the bright side, bookings came in at $2.22 billion, slightly exceeding the $2.21 billion consensus estimate.

Looking ahead, the company’s fourth-quarter forecast disappointed investors. EA expects earnings between $0.76 and $1.17 per share, falling short of the anticipated $1.35. Projected bookings of $1.44 billion to $1.59 billion also came in below Wall Street’s $1.65 billion estimate.

The company reaffirmed its full-year outlook but provided a cautious range that left the high end of its earnings and bookings guidance below analyst expectations. EA anticipates fiscal 2025 earnings between $6.25 and $6.65 per share, slightly under the projected $6.69. Bookings are expected to range between $7 billion and $7.15 billion, with the upper bound aligning with analyst forecasts.

The cautious guidance follows EA’s recent decision to trim its annual bookings forecast, citing weaker in-game spending on "FC 25" and disappointing early performance of its latest Dragon Age installment.

Electronic Arts Inc. (NASDAQ: EA) is a major player in the video game industry, known for popular franchises like FIFA, Madden NFL, and The Sims. Recently, EA has come under scrutiny as the Rosen Law Firm investigates potential securities claims against the company. This investigation is due to allegations that EA may have misled investors with inaccurate business information. The situation intensified after EA revised its fiscal year 2025 guidance, predicting a mid-single-digit decline in live services net bookings, primarily due to changes in Global Football. This announcement led to a significant 16% drop in EA's stock on January 23, 2025.

The Rosen Law Firm, known for its expertise in securities class actions, is preparing a class action to recover investor losses. They offer a contingency fee arrangement for those who purchased EA securities. The firm has a track record of successful settlements, including the largest ever against a Chinese company. Investors are encouraged to contact the Rosen Law Firm to join the prospective class action and seek compensation.

On the same day as EA's stock drop, BMO Capital downgraded EA from an "Outperform" rating to a "Market Perform" rating, as highlighted by TheFly. At the time of this downgrade, EA's stock was priced at $142.35. This downgrade reflects concerns about EA's future performance following the revised guidance. The current stock price of EA is $115.83, showing a decrease of 1.76% or $2.08, with fluctuations between $115.36 and $117.585 today.

Over the past year, EA's stock has seen a high of $168.5 and a low of $115.21. The company's market capitalization stands at approximately $30.38 billion, with a trading volume of 2,013,409 shares. These figures indicate the volatility and uncertainty surrounding EA's stock in light of recent developments. Investors are closely monitoring the situation as the investigation unfolds and the class action progresses.

• Electronic Arts Inc. (NASDAQ:EA) is expected to report a significant year-over-year increase in earnings and revenue, driven by its strong gaming portfolio.
• Analysts have adjusted the consensus EPS estimate upward by 0.1% over the past month, reflecting a positive outlook on EA's financial performance.
• EA's financial metrics, including a P/E ratio of 33.56, price-to-sales ratio of 5.26, and a debt-to-equity ratio of 0.29, underscore its robust market valuation and financial health.

Electronic Arts Inc. (NASDAQ:EA) is a major player in the gaming industry, known for its popular franchises like FIFA, Madden NFL, and The Sims. As EA prepares to release its quarterly earnings on October 29, 2024, analysts are closely watching the company's financial performance. Wall Street estimates EA's earnings per share (EPS) to be $2.03, with projected revenue of $2.04 billion.

The gaming giant is expected to report a year-over-year increase in earnings, driven by a robust gaming portfolio. Analysts project an EPS of $2.02, marking a 38.4% increase from the previous year. Revenue is anticipated to reach $2.03 billion, reflecting an 11.6% rise from the same quarter last year. These figures suggest strong growth, supported by the popularity of EA's franchises.

Over the past month, the consensus EPS estimate has been adjusted upward by 0.1%, indicating a positive reassessment by analysts. Such revisions are important as they can influence investor reactions and impact EA's short-term stock price performance. A positive earnings surprise could boost the stock, while a miss might lead to a decline.

EA's financial metrics provide further insight into its market valuation. The company has a price-to-earnings (P/E) ratio of 33.56, indicating how the market values its earnings. Its price-to-sales ratio is 5.26, reflecting the market's valuation of its revenue. Additionally, EA's enterprise value to sales ratio is 5.23, suggesting the market's valuation of its total value relative to sales.

The company's debt-to-equity ratio is 0.29, indicating a relatively low level of debt compared to its equity. EA also maintains a current ratio of 1.45, showing its ability to cover short-term liabilities with short-term assets. These financial metrics highlight EA's strong position in the gaming industry as it prepares to release its earnings.

Deutsche Bank analysts downgraded Electronic Arts Inc. (NASDAQ:EA) to Hold from Buy and lowered their price target on the stock to $125 from $157 amid slower growth and strategic reset.

The downgrade is due to a negative impact on EA's fundamental outlook caused by various factors. These factors include greater macro-related challenges, a reset of EA's mobile strategy, and less new content than previously anticipated for next year.

As a result, the analysts are forecasting lower levels of growth for 2023-2025 compared to previous expectations. EA's initial guidance for 2024 also calls for mid-single-digit topline growth, which is lower than the prior forecast and Street estimate at that time. This implies that EA's net bookings will be around $7.5 billion, which compares to the Street estimate of $8.2 billion.

Deutsche Bank analysts downgraded Electronic Arts Inc. (NASDAQ:EA) to Hold from Buy and lowered their price target on the stock to $125 from $157 amid slower growth and strategic reset.

The downgrade is due to a negative impact on EA's fundamental outlook caused by various factors. These factors include greater macro-related challenges, a reset of EA's mobile strategy, and less new content than previously anticipated for next year.

As a result, the analysts are forecasting lower levels of growth for 2023-2025 compared to previous expectations. EA's initial guidance for 2024 also calls for mid-single-digit topline growth, which is lower than the prior forecast and Street estimate at that time. This implies that EA's net bookings will be around $7.5 billion, which compares to the Street estimate of $8.2 billion.

Electronic Arts (NASDAQ:EA) reported its Q2 results, with EPS of $1.07 coming in worse than the Street estimate of $1.36. Net bookings were $1.75 billion, worse than the Street estimate of $1.81 billion.

For Q3/23, the company anticipates net bookings to be in the range of $2.425-2.525 billion, compared to the Street estimate of $2.6 billion. For the full 2023 year, the company lowered its net bookings guidance to a range of $7.65-7.85 billion, compared to the Street estimate of $7.97 billion. Full-year guidance cut is attributed to FX. The cut is well within investor expectations given the well-understood FX movements and weakness in mobile gaming.

The company's sports franchises were highlights of the quarter. Both delivered record-breaking metrics: FIFA had its biggest launch on console/PC in the franchise's history with 6% growth in FUT (FIFA Ultimate Team) players; Madden UT and net bookings are both up double-digits.