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Why Electronic Arts Stock Just Crashed 17%
EAElectronic Arts(EA) The Motley Fool·2025-01-23 18:17

Earnings Performance - EA preannounced fiscal Q3 2025 earnings, with shares dropping 17.5% to 117.50pershare[1]−Expectedearningspersharewere117.50 per share [1] - Expected earnings per share were 1.15, but the actual figure is 1.11,missingWallStreetestimates[1]−Q3netrevenueisprojectedtobe1.11, missing Wall Street estimates [1] - Q3 net revenue is projected to be 1.88 billion, below the Wall Street estimate of 2.33billion[3][4]RevenueGuidance−EAinitiallyguidedformid−single−digitgrowthinliveservicesnetbookingsforfiscal2025[2]−Theguidancehasbeenrevisedtoamid−single−digitdecline,reflectingweakerperformance[2]FactorsImpactingPerformance−AslowdowninbookingsfortheGlobalFootballfranchisecontributedtotherevenuedecline[3]−ThenumberofplayersforDragonAgegamesfellshortbynearly502.33 billion [3][4] Revenue Guidance - EA initially guided for mid-single-digit growth in live services net bookings for fiscal 2025 [2] - The guidance has been revised to a mid-single-digit decline, reflecting weaker performance [2] Factors Impacting Performance - A slowdown in bookings for the Global Football franchise contributed to the revenue decline [3] - The number of players for Dragon Age games fell short by nearly 50% in Q3 [3] Valuation and Market Reaction - EA stock is trading at 30 times trailing earnings, which may be too expensive given the slumping sales [5] - Despite missing revenue estimates, EA's earnings of 1.11 per share slightly beat Yahoo! Finance's prediction of $1.06 [4]