If it’s in the game it’s in the game. That used to be all you needed to hear to know that you were about to play some elite video games. Now, it seems that the only thing that’s in the game is micro transactions and loot boxes. I want to take a look at what’s going on with the ea stock and if it makes sense to invest.

Missing The Target

The stock is currently the lowest it has been for almost 2 years now. It’s currently floating around 90 right now. It was only July of 2018 that the stock was trading at $151 per share. It started to slide when at the earning report in July they announced that Battlefield V was going to be delayed and this meant a lot of revenue would be pushed to the following quarter. That was the start of the downward spiral that kept heading down until just recently. After the earnings report at the beginning of February it actually dipped into the 70’s. There are a couple of reasons for this. When it was finally released Battlefield V didn’t sell as well as anticipated and missed the mark by approximately 1 million copies. FIFA did well and continues to do well for them but this was another over estimate as it missed the mark in ways too. This was in part due to the expectations were based upon the previous year which had a World Cup. EA had high hopes a lot of those people would be in the eco system from the previous iteration and continue to buy.

In Apex We Trust

Luckily apex legends came out of nowhere to help investors regain confidence in the stock. Investors aren’t real gamers and real gamers aren’t true investors. What I mean by this is that EA and Respawn released a battle royale with a battle pass, loot boxes and cosmetic skins. When investors hear those words they immediately think Fortnite and how that took the world by storm. Thoughts running through their head about how that game was downloaded over 200 million times and how much money was made in Fortnite. Things seemed real good right out of the gate when in the first day it had over 1 million users and now not even a full month later they have over 50 million users. The true bright side here is that no of the in game purchases feel like they are trying to trick you. From the people I have talked to in game they are all salivating at the mouth for the battle pass and can’t wait to buy it. People love respawn, this game and they just want to support it anyway they can. This caused the stock to finally stop its downward spiral with the great news and bounce upwards about 28% from the high 70’s to the mid to high 90’s.

Apex legends should help this ship stay afloat for 2019 which they predicted would be a done year based on lack of releases. There is a decent possibility that it exceeds expectations based on lack of comparable. For the rest of 2019 there isn’t a whole lot to get excited for outside of a handful of titles. At the earning report they mentioned all the sports titles will come out like clock work as they always do. As well they did announce a new entry in the PVZ and need for speed but I don’t expect those to send the stock soaring. They didn’t explicitly mention a new battlefield or battlefront this year so it will be interesting to find out what DICE is up to and when we will see it. Battlefield battle royale will be released early 2019, which if it does well would also help. This mode is just part of Battlefield V from last year that got delayed past the launch of the main game. For our thoughts and dreams of what this mode could be, check out our article here. I think if it doesn’t do well then it will affect anything, the game missed expectations so anything positive is good. The lifespan on shooters is short so if you can pull new people or lapsed players back it’s just a bonus at this point. Another big title this year is Star Wars Jedi:Fallen Order. This has been a long anticipated game from the titanfall and apex legends geniuses at respawn. It was also announced that a large titanfall game will also be out this year. Both of these could surprise and delight investors because people that fell in love with the free to play apex legends might be interested in what else respawn has to offer. These are potentially gamers that might have passed these games without apex.

In A Stock Market Far Far Away

As mentioned just last summer the stock was trading around $150. I always like to know what is a realistic range for a stock to be. This stock has the ability to trade around $150 and even beyond if it the gaming market continues to grow as it has done pretty much year over year. This growth combined with EA making smart decisions makes this a target the stock can reach again. They still have the Star Wars license and there has been a lot of rumors about Disney canceling that deal but those are just rumors at this point. They have clearly seen games that are in development and are pleased with what they have seen. At the initial time of the deal ea mentioned they already had 3 teams on Star Wars games. Dice, which turned out to be battlefront series, visceral which has since been canceled and closed and bioware , which we have heard nothing from about Star Wars game. Granted bioware has lost a bit of the shine that jewel once had but a new sw game from them has big potential. Any other games in development that we don’t know in that universe have the potential to be big stock boosters, especially if timed properly to capitalize on the hype of the movies.

The one final reason I have for EA reaching its former glory again is that they understand business. They have been making some great acquisitions for a long time now and this has helped expand the company in many ways beyond what it ever could have been. The most recent of these include purchasing respawn with their shooter talents, purchasing bioware with all their RPG prowess, purchasing DICE who have helped mold the battlefield series into what it is today and purchasing maxis (now defunct) which lead to all the sims success that we know of today. My thoughts are its only a matter of time before they make some more smart purchases.