Electronic Arts: Stock Prices Decline Amid Challenges, but History Suggests Upward Trend

Electronic Arts Downward Trend

The Electronic Arts company, EA, has recently seen a decline in its stock price, with shares dropping by 6%. This underperformance contrasts with the Nasdaq, which has been experiencing strong growth in the new year.

EA’s decline is largely attributed to their Q3 results, which came in $2.3 billion below consensus. While the company’s Q3 results were disappointing, there were some bright spots. First, EA’s live services performed well, with this sector only contributing to revenue growth.

On the other hand, their mobile sector saw a decline in revenue, which ultimately pulled down the company’s overall performance. As a result, EA announced the closure of its largest mobile offerings, Battlefield and Apex Legends.

Analysis of Electronic Arts Financials

Electronic Arts have recently revised its financial projections for the 2023 fiscal year. The company now expects its sales to be between $7.25 and $7.35 billion, significantly decreasing from its previous estimate of $7.55 to $7.75 billion. The same trend is visible in the company’s earnings forecast, which has been revised from $5.84 to $6.10, a substantial drop from its earlier estimate of $6.95 to $7.25.

One of the reasons for this upside-down revision is the company’s decision to delay the launch of its highly anticipated game, “Star Wars Jedi.” The launch has been pushed to the end of April, which has resulted in a 10% drop in the stock price over the past five days. The game is expected to generate substantial revenue for EA, and its delay has significantly impacted the company’s financial projections.

History Would Beg To Differ

The value of Electronic Arts stock has decreased by 6% recently. However, based on historic trends, the stock may increase soon. Over the past decade, a drop of 6% or more in a month has happened 419 times, and out of these instances, 275 led to an upward trend in EA’s stock in the following month, translating to a 66% probability of the stock going up.

Additionally, a significant decline of 10.2% or more within five days resulted in a rise in the stock 56% of the time in the subsequent five days. Similarly, a dip of 6.2% or more over ten days had a 61% chance of leading to an upward trend in the next ten days.

And a decline of 5.5% or more over 21 days was followed by a 66% likelihood of the stock rising in the subsequent 21 days. These numbers suggest that there may be a higher chance of EA’s stock rising over the next five days, while the next ten and 21 days should bring something positive in stock numbers

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