EA Stock Crashes on Earnings Warning. Should Investors Be Worried?

Core Viewpoint - Electronic Arts (EA) has reported disappointing preliminary results for its fiscal 2025 third quarter, leading to a significant downward revision of its full-year bookings forecast, resulting in an over 18% drop in stock price [1][2]. Financial Performance - For the fiscal third quarter, EA expects revenue of approximately $1.883 billion and earnings of roughly $1.11 per share, down from previous guidance of $1.875 billion to $2.025 billion in revenue and earnings between $0.85 and $1.02 per share [2]. - For the full fiscal year, EA anticipates a mid-single-digit decline in net bookings, a shift from its earlier guidance of mid-single-digit growth, primarily due to underperformance in its Global Football unit [3][4]. Market Reaction - EA's stock was the worst performer in the S&P 500 on the day of the announcement, reflecting investor concerns over the company's financial outlook [1]. - Despite recent struggles, Wall Street analysts remain generally bullish, with an average target price of $153.18, indicating an implied upside of over 30% from current levels [6][7]. Analyst Opinions - Financial services firm Wedbush has maintained an Outperform rating and a price target of $173, suggesting confidence in a rebound despite the current challenges [8]. - Analysts express that EA may face a period of stagnation, referred to as "dead money," until the company provides clearer visibility into its future release schedule for fiscal years 2026 and 2027 [9].