EA - Embedded Expectations Analysis - 2021 07 29
Electronic Arts Inc. (EA:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 29.7x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may be concerned about growth opportunities, their franchise acquisitions, and further expansion into the mobile segment.Specifically, management may lack confidence in their ability to further innovate for FIFA Ultimate Team, increase investments in their larger franchises, and capitalize on major brand growth opportunities, particularly in the sports and mobile games segments. Furthermore, they may have concerns about the progress of the development of Battlefield mobile and the potential of their Codemasters, Glu, F1, and Metalhead acquisitions. Management may also lack confidence in their ability to manage their capital expenditures and monetize their mobile offerings, particularly Apex Mobile. Moreover, they may have concerns about the potential of Respawn's new content, their Frostbite engine, and EA Play. Finally, management may be exaggerating the leadership position of EA SPORTS in sports gaming, and they may have concerns about the sustainability of social interactions in gaming post-pandemic
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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