EA - Embedded Expectations Analysis - 2019 09 06
Electronic Arts Inc. (EA:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 16.1x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management has concerns about their ability to sustain innovation and drive player growth.Specifically, management may be concerned about the sustainability of recent daily and weekly active player growth for Apex Legends and of growth in their competitive mode for FIFA. Furthermore, they may lack confidence in their ability to innovate in the Plants vs. Zombies franchise, and they may lack confidence in the sustainability of their development pipeline. In addition, they may lack confidence in their ability to drive new users to the FIFA franchise through alternative game modes like The Journey and VOLTA. Moreover, management may be concerned about their ability to develop an organization structure around subscriptions, and they may be concerned about their ability to continue adding value with their FIFA and Madden franchises.
Electronic Arts develops, markets, publishes and distributes games, content and services that can be played and watched on a variety of platforms, including game consoles, personal computers, and mobile phones. The company markets and sells its games and services through digital distribution channels and through retail channels. Digitally, the company's console games and services can be purchased through third-party storefronts. In its games and services, the company utilizes brands that it either wholly own or license from others. The company develops and publishes games and services across genres. Within and alongside its games, the company provides live services, including in-game purchases, downloadable content, and esports.
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