Key points
- Electronic Arts is a major video game publisher with popular franchises including Madden NFL, EA Sports FC, The Simms, Need for Speed, Apex Legends, and Battlefield.
- Electronic Arts offers a $5.99 EA Play subscription, providing members access to its video game library, and has more than 600 million active players signed up to its EA Gamer Network.
- Take-Two Interactive is one of the best-selling video game franchises with its Grand Theft Auto series, as fans eagerly await the release of Grand Theft Auto VI in the calendar year 2025.
- 5 titles we like most from Electronic Arts
Video games have come a long way since the Atari 2600 era. The advent of game engines like Unreal Engine and Unity Software Inc. NYSE:U they have allowed independent studios and publishers unlimited possibilities to create increasingly realistic games. The popularity of eSports and live service online gaming, from player-versus-player (PVP) games like Fortnite to player-versus-all (PVE) games like Diablo IV and, more recently, Hell Divers 2 from indie studio Arrow Head, has changed. the dynamics of the sector.
More and more video games require Internet access and a network subscription, like Sony Group Co. NYSE: SNE PlayStation Plus and Microsoft Co. NASDAQ:MSFT Xbox Live. Large independent publishers are acquired by major game publishers who continue to dominate the space. Here are the two major video game publishers in the consumer discretionary sector that are benefiting the most from the video game recovery.
Electronic Arts
Electronic Arts Inc. NASDAQ:EA is one of the largest video game publishers in the industry. They have built a number of long-running franchises such as Madden NFL Football, Medaglia d’Onore, The Simms, Need for Speed, Battlefield, and EA Sports FC (formerly FIFA International Soccer). While their EA Sports segment has a large following, they have one of the hottest online multiplayer first-person shooters (FPS), Apex Legends, which competes heavily with Fortnite and Overwatch.
EA has been criticized for its propensity for microtransactions, loot boxes and lack of innovation. The company has a subscription plan called EA Play, which offers unlimited access to its library of titles for $5.99 a month, with a price increase expected soon. It has over 600 million active players in its EA Player Network.
Channel down daily
The daily candlestick chart on EA illustrates a declining price channel. This pattern includes a descending upper trendline that formed at $144.16 on February 22, 2024, covering lower highs on rebounds, and a lower descending trendline that represents lower lows on pullbacks. Each bounce attempt occurs at a lower high than a lower low. The daily relative strength index (RSI) is dropping towards the 30 band.
Green leaking steam
Electronic Arts reported fiscal third-quarter 2024 earnings per share of $1.07, beating consensus estimates by 19 cents. Revenue rose 1% year-over-year to $2.37 billion, below consensus estimates of $2.4 billion. Net bookings increased 1% year over year to $2.366 billion. Live services and other net bookings hit a record $1.712 billion, up 3% year-over-year. The EA Sports FC franchise recorded year-over-year net booking growth of 7%, which is even more impressive considering last year’s World Cup. EA Sports Madden NFL saw year-over-year pre-order growth of 5%.
The company repurchased 2.5 million shares for $325 million in the quarter, for a trailing 12-month total repurchase of 10.4 million shares for $1.3 billion. The Board declared a dividend of 19 cents per share payable on March 20, 2024 to shareholders of record on February 28, 2024.
Guide lowered
Electronic Arts provided below-consensus guidance. Fiscal fourth-quarter 2024 EPS is expected to range from 20 cents to 68 cents versus consensus estimates of 70 cents. Revenues are expected to be in the range of $1.625 billion to $1.925 billion versus consensus estimates of $1.83 billion.
Andrew Wilson, CEO of Electronic Arts, said: “Our incredible teams delivered a strong third quarter, entertaining hundreds of millions of people across our portfolio, driving deep engagement and recording live services. We remain focused on growing our franchises bigger and on delivering new and innovative games and experiences.” for our global communities.”
Interactive Take-Two
Take-Two Interactive Inc. NASDAQ: TWO is best known for its Rockstar game studios which created the infamous Grand Theft Auto (GTA) series. The latest GTA V was released in 2013 and continues to sell physical and digital copies on next-gen systems. It’s the third best-selling title of all time, with more than 195 million copies sold since 2013. Its GTA V online service dominates engagements as the company updates features, items and missions. However, the big news is the upcoming release of GTV VI. There hasn’t been a release date yet, but the first trailer, released on February 12, 2024, broke records by generating over 175 million views on YouTube in the first 24 hours.
Sports and 2K franchises
Take-Two has numerous franchises, most notably in the 2K Sports line, which includes NBA 2K, PGA 2K, and WWE 2K. The Red Dead Redemption series has been critically acclaimed as one of the deepest and best western video games of all time. Its game Red Dead Redemption 2 continues to sell online even though it was released in October 2026.
Daily bear banner template
TTWO’s daily candlestick chart illustrates a potential bearish flag collapse after forming the ascending trend line lower at $141.45 on March 14, 2024. The stock peaked at $156.25 on April 9, 2024, and stocks fell below the lower ascending trend line as the daily RSI plummeted. the 50 band. The pullback support levels are at $141.45, $137.25, $135.73 and $130.34.
The ship takes on water
Take-Two reported fiscal third-quarter 2024 EPS loss of 53 cents, beating consensus estimates by 18 cents. Revenue fell 3.1% year over year to $1.34 billion, in line with consensus estimates. Zynga’s Toon Blast led in-app purchases. Red Dead Redemption, GTA Online and GTA V exceeded plans during the quarter. NBA 2K24 and mobile advertising saw slow sales. The company still expects NBA 2k24’s lifetime net pre-order to be in line with NBA 2K23.
Downward guidance
The company is launching Zynga’s hit fourth-quarter mobile title Match Factory to boost its marketing. This implies that they lower his guidance. The company expects an EPS loss of 90 cents to $1, versus a consensus loss of 54 cents. Expected revenues are between $1.27 billion and $1.32 billion versus consensus estimates of $1.51 billion.
Hold on for GTA VI
Take-Two CEO Strauss Zelnick highlighted the strength of its powerful franchises. GTA V sales exceeded expectations, leading to sales exceeding 195 million copies worldwide. GTA Online’s holiday update, called Chop Shop, has captured the largest number of active users in years, including the largest increase ever for GTA Online user accounts. This was attributed to the variety and depth of new car robberies and positive community sentiment. According to the earnings presentation, the company plans to launch GTV VI in calendar year 2025.
Zelnick briefly touched on GTA VI by saying, “The Grand Theft Auto series is also benefiting significantly from the excitement surrounding Rockstar’s announcement of Grand Theft Auto VI and the release of its first trailer, which, with 93 million of views in 24 hours, broke YouTube records.” for the launch of a non-music video and, together with partner channels, became the biggest video debut ever…. Rockstar’s recent partnership with Netflix to launch the GTA trilogy is also a resounding success, quickly gaining the highest rate of installations and engagement on the gaming platform of subscription services.”
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