Why Did EA Stock Tumble to September 2023 Levels? Inside the Disheartening Bookings Update

Electronic Arts (EA) stock dropped more than 16% on Thursday following an update from the company.  The stock is now trading at lows not seen since September 2023 on its heaviest trading volume in the last five years.

The selling follows a disappointing update on its Q3 (December) and FY25 (March) net bookings.  The update comes just two weeks ahead of the company’s earnings report scheduled for February 4.

Known for major sports franchises like Madden and EA Sports FC, and other key series like Dragon Age and Battlefield, EA revised its booking forecasts lower. 

For Q3, projections were adjusted to around $2.215 billion from an initial forecast of $2.40-2.55 billion.  That range was already below market expectations. 

For the full fiscal year, EA now anticipates bookings between $7.00 and $7.15 billion, down by $575 million from earlier estimates.

The downward revision was largely due to underwhelming performance from EA Sports FC 25, a cornerstone of their portfolio.  There was also a surprising downturn in player engagement with Dragon Age, which saw participation halve against expectations. 

This news was particularly shocking given EA's previous optimistic outlook during their last earnings call in October.  On that call, the company expressed confidence in these franchises. Despite good reviews for the latest Dragon Age installment, player reception has been tepid.

In addition, EA's previous predictions of growth in fiscal year 2025, buoyed by strong performances in its football titles, were revised lower.  

EA does maintain a positive long-term outlook, expecting growth resumption in 2026 and sustained margin expansion through 2027.  

The immediate future appears challenging though.  Overall spending on video games is on the decline, with recent months showing significant decreases in sales of gaming products.

Shares of Electronic Arts dropped below $120 on Wednesday.  The stock hadn’t traded at that price since 2023 and marks a new long-term bear market trend.

Shares are likely to consolidate around that price, but investors should expect even lower prices over the next three months.

Wall Street analysts have maintained an average price target of $153 on the stock, which is likely to see downgrades.  Those downgrades will trigger additional selling by retail investors.

Electronic Arts stock now holds a bearish outlook with a price target of $100.

 

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