EA stock drops 7% on disappointing earnings forecast

On January 22, 2025, Electronic Arts (EA) announced a downward revision in its fiscal year 2025 guidance, leading to a notable drop in its stock price.

EA forecasts net bookings of $2.215 billion in the fiscal third quarter, which ended December 31, down from $2.4 billion to $2.55 billion.

According to a statement from the company, revenue for the December quarter will be around $1.88 billion, with diluted earnings per share of $1.11.

For the fiscal year ending March 31, EA estimates net bookings of $7 billion to $7.15 billion, down from $7.5 billion to $7.8 billion. EA claims net bookings include online and physical game sales.

Read also: Moniepoint, Visa partner to foster SMEs’ growth across Africa The role-playing game "Dragon Age," available on consoles including the Sony PlayStation and Microsoft Xbox , had 1.5 million players during the quarter, the company reported, falling short of its goals by over 50 percent.

"During Q3, we continued to deliver high-quality games and experiences across our portfolio," EA CEO Andrew Wilson said. "Dragon Age and EA SPORTS FC 25 underperformed our net bookings expectations."

Disappointing performance of key titles The poor performance of EA Sports FC is particularly concerning, given that it is the successor to the highly successful FIFA series.

EA Sports launched the EA Sports FC series after ending its licensing agreement with FIFA in 2022, marking a significant shift in its football gaming strategy.

The first game in the series, EA Sports FC 24, was released in 2023, but it has yet to match the popularity of its predecessors.

As Andrew Wilson, CEO of Electronic Arts, noted during an investor call, "We started our FY25 strong. We beat our net bookings guidance, and we executed across our business as we entertained and connected hundreds of millions of people around the world".

However, this optimism contrasts with the current market concerns about EA's strategic direction and growth potential.

Read also: Netflix raked in $10.25bn revenue in 2024, hit 19 million new subscribers in Q4 Market reaction and challenges ahead The market reaction to EA's announcement was swift, with the stock becoming the biggest decliner in the S&P 500 on January 22, 2025.

The company's live services segment, which had previously shown growth, is now expected to decline similarly. This shift reflects competitive pressures and EA's limited success in diversifying beyond its sports gaming portfolio.

As EA prepares to announce its final fiscal third-quarter results on February 4, 2025, investors closely watch how the company will address these challenges.

Market experts are still unsure if EA will be able to return to growth in fiscal year 2026, even after these setbacks.