Electronic Arts (EA) experienced a significant stock decline following weaker-than-expected demand for its EA SPORTS FC 25 video game, leading to a reduced financial outlook. This analysis from Hyperloop Capital Insights explores the key factors contributing to EA’s stock plunge and revised forecasts.
EA’s preliminary results for the fiscal third quarter, ending December 31, revealed a projected net booking of $2.22 billion, falling short of the initial forecast of $2.4 billion to $2.55 billion. Analysts’ estimates of $2.44 billion were also surpassed. Consequently, EA adjusted its fiscal 2025 net bookings projection to a range of $7 billion to $7.15 billion, down from the previous estimate of $7.5 billion to $7.8 billion.
This news sent EA stock plummeting by 17%, making it the biggest loser in the S&P 500 and pushing its closing price to the lowest point since September 2023. The underperformance of EA SPORTS FC 25, a key title in EA’s Global Football segment, was cited as the primary reason for the downturn. This segment, which had consistently delivered double-digit net bookings growth in previous fiscal years, experienced a significant slowdown in momentum towards the end of the third quarter.
Furthermore, the Dragon Age franchise, another major release for EA, underperformed significantly. Engaging only about 1.5 million players during the quarter, it fell nearly 50% short of the company’s expectations. EA is scheduled to release its complete fiscal third-quarter results on February 4th, providing further details on the factors influencing its performance. The disappointing sales figures for both EA SPORTS FC 25 and Dragon Age highlight challenges within the video game market and raise concerns about EA’s future revenue projections. This development underscores the importance of diversification and strategic planning within the gaming industry.
In conclusion, the significant drop in EA’s stock price following the lowered outlook reflects investor concern regarding the company’s near-term performance. The underperformance of key franchises like EA SPORTS FC 25 and Dragon Age necessitates a strategic reassessment by EA to address the evolving demands of the gaming market. While the final fiscal third-quarter results are yet to be released, the preliminary figures paint a challenging picture for the company.
