Electronic Arts Stock Tanks Nearly 20% After 'Dragon Age: The Veilguard' And 'EA Sports FC 25' Failed
Electronic Arts’ stock price has tanked nearly 20% after the company announced that Dragon Age: The Veilguard, EA Sports FC 25, and its live service business failed to meet expectations.
In a press release aimed at tempering expectations for its upcoming Q3 FY25 results, EA revealed, “The company now projects a mid-single-digit decline, with Global Football accounting for the majority of the change.”
It added, “Global Football had experienced two consecutive fiscal years of double-digit net bookings growth. However, the franchise experienced a slowdown as early momentum in the fiscal third quarter did not sustain through to the end. As a result, EA revises its outlook for Global Football to end the fiscal year down mid-single-digit at the midpoint of the new outlook.”
Next, it noted how Dragon Age: The Veilguard massively missed expectations, “Separately, Dragon Age engaged approximately 1.5 million players during the quarter, down nearly 50% from the company’s expectations.”
From there, EA significantly reduced its expected net bookings. It revealed it was reducing its expected net bookings for the third quarter from a range of between $2.4 billion and $2.55 billion to $2.215 billion.
It also reduced its entire yearly net bookings from between a range of $7.5 billion to $7.8 billion to a range of $7 billion and $7.15 billion.
The company also adjusted down its expected net revenue for the quarter. It previously shared it expected net revenue to be between $1.875 billion and $2.025 billion to $1.883 billion.
In the wake of this report, EA’s stock price has declined nearly 20% from $143.17 on January 22nd to $118.58 on January 23rd.
The stock has continued to move downward today. As of writing, it currently sits at $115.69.
Not only has the stock price declined but Bank of America Securities analyst Omar Dessouky downgraded the stock from Buy to Neutral and lowered the price forecast from $170 to $130.
According a Benzinga report Dessouky specifically took issue with the decline of FC 25. The report noted, “Without FC as a key growth driver, the analyst finds it hard to see how EA can sustainably outperform the industry while improving its margins since FC contributes to around 60% of EA’s operating income, with Ultimate Team likely being one of its highest-margin games.”
The Enterprise Leader also noted that analysts from BMO Capital Markets also downgraded the stock from “an ‘outperform’ rating to a ‘market perform’ rating.” BMO also lowered their price forecast from $160.00 to $145.00.
What do you make of the stock price tanking?
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