Electronic Arts Stock Falls 14% After Missing Q3 2019 Earnings Estimate

cageymaru

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Electronic Arts stock fell 14% in after hours trading as the gaming giant missed its Q3 2019 earnings estimate. EA reported revenue totaling $1.61 billion compared to the Refinitiv estimate of $1.75 billion. Earnings were $1.95 per share compared to the analyst estimate of $1.94 per share. EA expects Q4 2019 revenue to be approximately $1.163 billion with a net income of $170 million.

"The video game industry continues to grow through a year of intense competition and transformational change," said CEO Andrew Wilson. "Q3 was a difficult quarter for Electronic Arts and we did not perform to our expectations. We are now applying the strengths of our company to sharpen our execution and focus on delivering great new games and long-term live services for our players. We're very excited about Apex Legends, the upcoming launch of Anthem, and a deep line-up of new experiences that we'll bring to our global communities next fiscal year."

"FIFA stands out as a robust franchise through a tumultuous year in the video game industry," said COO and CFO Blake Jorgensen. "Elsewhere in the business, we're making adjustments to improve execution and we're refocusing R&D. Looking forward, we're delighted to launch Anthem, our new IP, to grow Apex Legends and related Titanfall experiences, to deliver new Plants vs. Zombies and Need for Speed titles, and to add Star Wars Jedi: Fallen Order to our sports titles in the fall."
 

steakman1971

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Ouch. I miss the gold old days when Trip Hawkin's started EA. Back then (mid 80's) - an EA game was pretty much known for quality. Yes, I'm going way back in time...
I can't think of the last EA game I've purchased - maybe one of the PS4 Star Wars games. It was ok but kind of boring.
 

NeoNemesis

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Ouch. I miss the gold old days when Trip Hawkin's started EA. Back then (mid 80's) - an EA game was pretty much known for quality. Yes, I'm going way back in time...
I can't think of the last EA game I've purchased - maybe one of the PS4 Star Wars games. It was ok but kind of boring.
I bought Mass Effect: Andromeda. It was nowhere near as well made as the previous titles in the series.
 

IndyColtsFan

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Ouch. I miss the gold old days when Trip Hawkin's started EA. Back then (mid 80's) - an EA game was pretty much known for quality. Yes, I'm going way back in time...
I can't think of the last EA game I've purchased - maybe one of the PS4 Star Wars games. It was ok but kind of boring.
I remember those days well, when EA was seen as the upstart with quality games. I miss Adventure Construction Set.
 
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I am more worried about the statement "long term games and services" this reads to me like them saying "Hello, us as EA have not learned from our mistakes and plan on continuing our efforts to push monetization in a hibitual mannerism for gamers and we no longer make games, but instead make gaming services to juice profits from long dead beaten horses."

Is there a possibility that the investors are losing confidence with business decisions to inflate profits beyond all ready healthy margins and are trying to grow beyond what a given market would allow for.
 
Joined
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Messages
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I remember those days well, when EA was seen as the upstart with quality games. I miss Adventure Construction Set.
EA used to be a good publisher. I think Bioware's degrading quality of games is what really pushed me over the edge into the hate this company feeling, ME2 and Dragon Age origins were amazing experiences and to me it just sucked afterwards with clear indications of milking, also the situation of Kingdoms of Amalur and Hellgate London just killed me as I loved the games and what they did but clear decisions were bad.
 

Lakados

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Couldn't happen to a better bunch....

Maybe EA will use this as a turning point. But I doubt it.
 

stolikat

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Burn them with fire! Seeing that company go down would be the one of the best things that could happen to the gaming world.
 

Peter2k

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Sigh, on one hand it couldn't happen to a more deserving company.

On the other I quite liked Anthem.

The whole statement reads more like a "plan" to double down on stuff they "know" works, ie microtransactions and battle royale

All the misgivings players and reviewers pointed out over the last decade are to blame, and neither is telling hours customers not to buy a game if they don't like the direction.

So something tells me that even if Anthem brings in a billion dollar in its first week it's going to drown in microtransactions.
And if it brings in ANY less then it "wasn't successful" and gets canned.
 

Merc1138

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So because of no battle royale, they missed a million sales, and a good chunk of the sales they did get were because of the massive discount 2 weeks after launch. Couldn't possibly be because an exec told people not to buy their game, couldn't possibly be that even though a vocal minority was outraged about one thing they threw it in everyone's faces and even held a party about it, couldn't possibly be all the bullshit leading up to it, definitely wasn't due to players getting quickly burnt out on the lack of content for the first 6 months of BF1, nope... just the BR mode missing.
 

Master_shake_

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something something something buy our games and like them or else we won't make anymore.
 

umeng2002

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If EA wants mobile monitization, maybe they should just make mobile games. Stop alienating console/ PC games.
 

Wiffle

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All the EA hate aside... I think its totally bogus that a companies stock can take such a hit because they don't hit an "estimate" projected by some 3rd party "anal"yst....

There are some seriously retarded rich people out there in the world. The fact that they jump to the beck and call of some else really proves that just because you are rich, doesn't mean you are smart.

Congrats on the people who are scooping up cheap EA stock that's probably going to rebound after its fiscal year report. Easy money by convincing a few people something is "bad"...
 

Nytegard

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See where that gets you. Ignore gamer goodwill and only focus on the dollar.
To be fair, that's how you make the stock price go up.

But I think EA is once again going to learn the wrong lesson, and figure that they can alienate gamers even more to focus on the Chinese Whale model of gaming.
 

pillagenburn

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The Battlefield 5 World War 2-era Cyborg lady from the future already knew that she was a really bad idea and nobody liked her because she knew that no one would believe that there were FUCKING CYBORG WOMEN WITH MACHINE GUNS IN WORLD WAR 2. She read all the shitposting from privileged males, about herself, before being sent back in time to single-handedly win World War 2. When EA informed her that they couldn't bring her back she was so pissed off that she waited 40+ years and loaded the boat with EA stock in the 80's when it was under a dollar and then just now, in 2019, she backed up the dump trucks on EA's stock to spite them.

true story.
 

joobjoob

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I ignored the community outrage and bought dragon age inquisition and andromeda at release both proved my communities concerns correct. Not burned since by avoiding fallout76 and anthem. Thanks all you loud obnoxious nerds! Keep being you.
 

emphy

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To be fair, that's how you make the stock price go up.

...
Game company executives who concentrate on that likely have a nice warm seat reserved for them in hell, where they are going to be forced to play their companies games forever.
 

KazeoHin

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Sigh, on one hand it couldn't happen to a more deserving company.

On the other I quite liked Anthem.

The whole statement reads more like a "plan" to double down on stuff they "know" works, ie microtransactions and battle royale

All the misgivings players and reviewers pointed out over the last decade are to blame, and neither is telling hours customers not to buy a game if they don't like the direction.

So something tells me that even if Anthem brings in a billion dollar in its first week it's going to drown in microtransactions.
And if it brings in ANY less then it "wasn't successful" and gets canned.
Anthem will ABSOLUTELY sell 'below expectations'. What was the last game you heard about that sold 'beyond expectations'?

It's a business practice. They over-promise 'expected sales' to far and away beyond what can be achieved for two reasons: to fluff their shareholders, and to have a shareholder-backed reason to shut down the studio who made the game and shave off the expense of running it, while raking in the money from selling the game and MT.
 

STEM

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I am more worried about the statement "long term games and services" this reads to me like them saying "Hello, us as EA have not learned from our mistakes and plan on continuing our efforts to push monetization in a hibitual mannerism for gamers and we no longer make games, but instead make gaming services to juice profits from long dead beaten horses."

Is there a possibility that the investors are losing confidence with business decisions to inflate profits beyond all ready healthy margins and are trying to grow beyond what a given market would allow for.
It looks like all of corporate America is following this flawed business model of chasing infinite growth. Good luck with that, as nothing is infinite in this world, and everything that has a beginning has an end.

I haven't spent a penny on anything EA branded in a very long time, and I won't for the foreseeable future.
 

vegeta535

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Good. We need a new video game crash to take out trash companies like EA and Activision.
 

HockeyJon

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All the EA hate aside... I think its totally bogus that a companies stock can take such a hit because they don't hit an "estimate" projected by some 3rd party "anal"yst....

There are some seriously retarded rich people out there in the world. The fact that they jump to the beck and call of some else really proves that just because you are rich, doesn't mean you are smart.

Congrats on the people who are scooping up cheap EA stock that's probably going to rebound after its fiscal year report. Easy money by convincing a few people something is "bad"...
While I agree that what you’re saying about analysts is true in a lot of cases (Apple in particular), there is more to it than that in EA’s case. They had a long history of underpromise and overdeliver in the market, and now they just slashed their guidance massively below expectations. Investors would have made projections about the growth rate based on the older numbers, since the valuation will incorporate expectations of where the company is going. It’s why companies like Amazon amen Tesla seem to perpetually command almost insane valuations, there is just so much optimism surrounding those companies.

Before August, EA had been projecting $5.55B for 2019. It later reduced that to $5.2B. Now it’s calling for $4.9B. They’re projecting $650 million less revenue for 2019 than they were half a year ago. Any stock with that kind of pattern is going to get its ass kicked because the growth investors are going to leave in droves. I don’t need third party analyst opinions to conclude that projections from the company sliding to that degree is a bad thing.

Long term, I think EA will probably be fine, especially with the rise of E-sports, but we do have a lot of independent studios now really nipping at the heels of the traditional AAA publishers.
 

djoye

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Maybe the gravy train is at the end of its tracks. I'm surprised that Battlefield has done as well as it did for as long as it has considering there have been yearly releases since 2002. People seem to really like Apex Legends, so that'll probably save them if they don't screw it up.
 
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