Electronic Arts Inc. sold-in more than 13 million units of “Star Wars: Battlefront” since its release over the holidays, but EA stock is down 8% in afterhours trading.
So is Electronic Arts the next THQ? Don’t count on it.
It’s not enough for a company to report an earnings beat, it has to raise guidance for the next quarter/fiscal year to keep Wall Street happy.
Instead, the publisher expects to rake in $875 million on the top line this quarter and 40 cents per share on the bottom, both on a non-GAAP basis — well below the middle-ground consensus for a profit of 50 cents per share on sales of $1.81 billion. For the full fiscal year ending March 31, EA expects non-GAAP per-share profits of $3.04 on $4.52 billion in sales, under the Street’s view for $3.10 EPS on sales of $4.56 billion.
The stock’s action Thursday evening is not uncommon: Investors are fickle, guided by emotions rather than reason. Market volatility leads to risk-off attitudes and the tendency to favor the short term over than the long term. And EA’s upcoming games lineup is looking sparse.
On Feb. 9, EA will debut “Unravel”, a quirky adventure in the vein of “Little Big Planet”, followed by “Plants vs. Zombies Garden Warfare 2”, “EA Sports UFC 2” and “Mirror’s Edge: Catalyst” in May. None of these will move the needle in a business sense for EA. Which is why EA’s already telegraphed the release of new Battlefield and Titanfall games sometime within its next fiscal year, with CEO Andrew Wilson saying:
“An all-new Battlefield game from DICE will arrive in time for the holidays, we’re excited to have a new Titanfall experience coming from our friends at Respawn – and of course, Mass Effect Andromeda from the team at BioWare will launch later in the fiscal year.”
To prove its long-term worth, EA is pulling a Donald Trump, exiting from the spotlight that is this year’s Electronic Entertainment Expo to host its own event – EA Play.
We’ll likely see more of these games at EA Play from June 12 to June 14, but it’s a bit unnerving that EA is pulling its floor space from E3. Offsite events during E3 haven’t typically fared well. When I attended E3 in 2013, Ouya held an event open to the public right across the street from E3, complete with kegs and the sort of scantily clad “booth babes” that were common at E3 in the ‘90s. We all know how Ouya turned out.
So why would EA pull itself out of the spotlight? I can’t say for sure, but it’s likely in keeping with the low expectations for the year.
That said, Electronic Arts isn’t down for the count, but it’s going to need a new IP to keep it in favor with players and investors alike.