Electronic Arts has 4 bad news about games – Lost $3 billion in stock market value in one day
Gaming developer Electronic Arts released its financial report for the last quarter of 2022 on January 31, 2023. The stock exchange then punished the company: In one day, on February 1, EA lost over 9% of its market value, which is already 3 billion US dollars for the huge company.
What did EA report on the quarter? The financial report actually sounds positive. EA says they’ve “delivered high-quality experiences” and had “record engagement with the biggest game brands.” Sounds great at first.
But then it says (via EA):
Although our teams have delivered for our players, the current macroeconomic situation has impacted the Q3 results. While navigating in the short-term, we focus on our long-term future […]
Andrew Wilson, CEO Electronic Arts
In other words, things aren’t going so well at the moment, although we’re trying very hard. But in the long run everything will be great again.
- EA’s revenue for the last 12 months is $7,146 billion, down 1% year-on-year
- FIFA 23 is on track to become the biggest title in the franchise
- The EA Network had grown to more than 650 million players by the end of the quarter
EA downgrades forecast because Star Wars game is delayed
Why is the market reacting so negatively? In a conference call, EA revealed a few things that aren’t so easy for investors to swallow (via deraktionär):
The game “Star Wars Jedi: Survivor” was supposed to be released on March 17, 2023, but was postponed to April 28, 2023 – so it will be released in a new quarter and fiscal year and will not be included in the balance sheet until later.
As a result, the company had to correct its forecast downwards, and now it is only expecting sales of between $1.7 billion and $1.8 billion in the current quarter, no longer $2.22 billion.
Expected earnings per share also drop between $6.95 and $7.25 per share to around $6.
EA calls loot boxes a fairly ethical surprise mechanism
Great Mobile hope in Asia dashed
What about the discontinued games? That adds to the difficulty. EA has announced that it will discontinue the mobile shooter Apex Legends Mobile and a new mobile spin-off for Battlefield that was still in beta.
This is such bitter news because EA has been raving to investors for years about how great Apex Legends is and that they wanted to conquer the Asian market with a mobile offshoot. Apparently that didn’t work.
Although Apex Legends Mobile has appeared in Singapore, Malaysia, the Philippines and Indonesia, it has apparently not been able to establish itself there.
Other mobile shooters are preferred in the region.
EA has also reportedly discontinued a planned single-player game for Apex Legends.
Although gaming stocks on the US stock market are hot right now, EA is weak
The canceled games, along with the postponement of the Star Wars game, caused EA to lose 9.26% in the stock market on February 1st.
With a market capitalization of $33 billion the day before, $3 billion in stock market value is gone.
Ironically, the sharp drop in stock market value comes at a time when some smaller gaming studios are surging in value: Motorsport Games’ stock shot up 7 times on Jan. 28. However, this has market-technical reasons and is not because MSGM has now released the next bomb game.
More on Apex Legends Mobile:
Apex Legends is better than the original version on mobile and EA doesn’t seem to be doing much about it