The game developer Electronic Arts presented its financial report for the last quarter of 2022 on January 31, 2023. The stock market then punished the company: In one day, on February 1, EA lost over 9% of its market value, which translates to about 3 billion US dollars for such a huge company.
What did EA report about the quarter? Actually, the financial report sounds positive. EA says: They have “delivered high-quality experiences” and recorded a “record engagement with the largest game brands.” Sounds great at first.
But it then states (via EA):
Although our teams delivered for our players, the current macroeconomic situation impacted the results of Q3. While we navigate short-term, we are focusing on our long-term future […]
Andrew Wilson, CEO Electronic Arts
In other words: At the moment, things are not going well, even though we are trying very hard. But in the long run, everything will be great again.
- EA generated 1% less revenue than the previous year, with $7.146 billion in the last 12 months
- FIFA 23 is on track to become the largest title in the franchise
- The EA Network grew to over 650 million players by the end of the quarter
EA lowers forecast as “Star Wars” game is delayed
Why is the market reacting so negatively? In a conference call, EA announced some things that are not easy for investors to swallow (via deraktionär):
The game “Star Wars Jedi: Survivor” was supposed to be released on March 17, 2023, but has been postponed to April 28, 2023 – now it will appear in a new quarter and fiscal year and will be reflected in the balance sheet later.
As a result, the company had to lower its forecast, now expecting revenue in the current quarter to be only between $1.7 and $1.8 billion, down from $2.22 billion.
The earnings expectation per share also drops from between $6.95 and $7.25 per share to around $6.
Great mobile hope in Asia shattered
What about the canceled games? This adds to the burden. EA announced the cancellation of the mobile shooter “Apex Legends Mobile” and a new mobile spin-off for Battlefield that was still in beta.
This is particularly bitter news, as EA has been boasting to investors for years about how great Apex Legends is and that they wanted to conquer the market in Asia with a mobile spin-off. That apparently did not work out.
Apex Legends Mobile was released in Singapore, Malaysia, the Philippines, and Indonesia – but apparently could not establish itself there.
In the region, other mobile shooters are preferred.
Allegedly, EA also canceled a planned single-player game related to Apex Legends.
Although gaming stocks are hot on the US market, EA is struggling
The canceled games, along with the delay of the Star Wars game, led on February 1 to EA losing 9.26% in the stock market.
With a market capitalization of $33 billion the day before, that means 3 billion dollars in market value simply gone.
The significant loss in market value ironically comes at a time when some smaller gaming studios have gained value dramatically: The stock of the company “Motorsport Games” skyrocketed to seven times its value on January 28. However, this has market-technical reasons and is not because MSGM has released the next blockbuster game.
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