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Vladimir Zernov
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Electronic Arts

Electronic Arts Video 12.05.21.

Electronic Arts Stock Declines After The Release Of Quarterly Report

Shares of Electronic Arts found themselves under pressure after the company released its quarterly report. Electronic Arts reported net revenue of $1.35 billion and earnings of $0.26 per share, missing analyst estimates. The company stated that net bookings for fiscal 2021 were $6.19 billion, which was above expectations.

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Electronic Arts noted that it repurchased 2.4 million shares for $325 million during the quarter. The quarterly dividend is $0.17 per share, so the stock yields about 0.49% at current levels which is not sufficient enough to attract income-oriented investors.

For the next fiscal year, the company expects to report net revenue of $6.8 billion and earnings of $1.34 per share, while net bookings are expected to total $7.3 billion.

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What’s Next For Electronic Arts?

Electronic Arts provided a decent report and offered optimistic guidance, but it looks that the market needs more in current market environment. Tech stocks have been under pressure in recent trading sessions, and this pressure may grow after today’s U.S. inflation reports which indicated that inflation was rising faster than expected. The yield of 10-year Treasuries has already moved from 1.60% to 1.68%, which is bearish for growth stocks.

Another important question for Electronic Arts investors is whether the reopening of the economy will hurt growth of electronic gaming activity. At this point, there are no signs that this is happening, and Electronic Arts noted that its live services had strong momentum.

Electronic Arts shares are mostly flat year-to-date after an optimistic start of 2021, and the company’s peers like Take-Two Interactive or Activision Blizzard have also fallen out of investors’ favor in recent months. At this point, Electronic Arts stock does not have enough internal catalysts to move against the general market trend which has been bearish for tech stocks in recent weeks. If yields move even higher and tech stocks continue to lose ground, Electronic Arts shares will likely follow the trend.

For a look at all of today’s economic events, check out our economic calendar.

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