Has Electronic Arts (NASDAQ:EA) Fallen to Buy Zone?

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The past year hasn't been kind to video game publisher Electronic Arts Inc. (NASDAQ: EA). Earlier this month, the company announced the delay of the hotly anticipated Battlefield V and released a revised full guidance. Already weak, the market seized on the opportunity and sent shares lower, sitting at 116 USD, off their all-time high of 148 USD, which was found in July this year. The market is pessimistic, to say the least, on Electronic Arts Inc. (NASDAQ:EA) right now and the delay tore through stock prices, however, this may be an excellent buying opportunity in the making.

A delay in release isn't necessarily a bad thing. First, if the title has problems it is much better to have a small delay to get those sorted out. The alternative is to release a buggy, supposedly triple-A game and get eviscerated by reviewers and gamers, effectively killing the product upon release. In fact, delays are expected for these reasons, and Electronic Arts Inc. (NASDAQ:EA) has had a few lessons on rushing releases in the past. For a time, they became notorius for "day one patches", where a game needs to be patched and fixed the day of release, and gamers hate that. Further, the delay pushes the game back to a November release. A much better time for a big title to release, closer to the holidays and November typically sees big numbers for video game sales. 

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Has Electronic Arts (NASDAQ:EA) Fallen to Buy Zone?

Electronic Arts Inc. (NASDAQ:EA) also has far more than a single game. In fact, Battlefield is merely a boost and shouldn't be the focus of investors. The biggest money-makers for Electronic Arts Inc. (NASDAQ:EA) are it's flagship sports titles like Fifa and Madden. These franchises and others like the Assassin's Creed games and the popular Sims series have helped Electronic Arts Inc. (NASDAQ:EA) become a giant of the industry and post increasing revenues year after year. These games haven't gone anywhere and they are nearly guaranteed to post big numbers again. If Battlefield V ends up being a flop, much like last year's Star Wars: Battlefront II, these games will be around to pick up the slack and more.

What I am saying here is that this dramatic fall could be a massive overreaction from the market, and market makers taking control of the narrative to push prices lower. Guidance was disappointing and pushed much of the money that would have been seen for the company next year to 2020. I wouldn't worry too much about that, however, Battlefield is hardly the main factor driving EA stock price. You could worry about a single game or instead focus on the bedrock of the company and its expansion into the world of esports. Its core titles continue to do well and in-game purchases have increased by 23% on the year, with signs of further increases. It isn't the end for Electronic Arts Inc. (NASDAQ:EA), not by a long shot.


Comments (7)

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The drop is all due to the stupid article from MF

   0   Reply (1)   Follow(437)  

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    • 3Kings
    • ,User
    • 02 October 2018, 11:10 am

    This drop can't be all about MF's article which stated nothing new. I'm thinking it's still back filling that gap between 115 up to 128. Short term, EA needed to stay above 120 for several days then the next resistance level would've been between 128 and

       0  

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      • DoubleD
      • ,  Contributor
      • 02 October 2018, 11:10 am

      What the heck happened? We were on a good pace/trend back to $128!

         0   Reply (2)   Follow(437)  

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        • Scott
        • ,User
        • 02 October 2018, 11:10 am

        the dump was due to a report reporting physical sales of FIFA were down. That's idiotic as digital sales are increasing.

           0  

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          It's because the Red Dead Redemption gameplay video. We have kids investing with Robinhood nowadays.

             0  

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            • John R
            • ,  Contributor
            • 02 October 2018, 10:10 am

            ATVI is down too

               0   Reply (0)   Follow(437)  

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              Going to bounce back down under $111 watch out below.\n

                 0   Reply (0)   Follow(437)  

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