EA Stock Takes a Hit

According to CNBC, EA's announcement today about their holiday forcasts being softer than anticipated might have something to do with Battlefront. CNBC quoted Baird analyst Colin Sebastian from a note he sent to his investor clients Wednesday

Despite raising F18 guidance, investors may focus on below-consensus F3Q EPS, reflecting some expense timing shifts and lower-margin licensed titles [such as Star Wars].

Another analyst was noted by CNBC:

Jefferies' analyst Timothy O'Shea said he is not totally confident about the financial success of the "Star Wars" game release this month, questioning whether users will behave the same way as users of EA's other popular games.

Investor guidance released by EA is definitely concerning. However, financial analysts across the board are very positive about EA's current gaming position and its future potential. As noted by Barron's, the shift in EA's business to the increasingly profitable, but always unpopular, in-game microtransaction model is what is proving to be so successful for the company:

The shift to digital is important because downloaded games are more profitable than sales of digital discs, and in-game purchases like new weapons or characters are almost pure profit for the company.

Despite constant consumer grumblings, it continues to be clear that gaming companies are prospering when they produce games that have in-game purchases.

---

comments powered by Disqus