EA has found itself in a tough spot to start 2018 after failing to meet Q4 estimates. Following a rough debut by Star Wars Battlefront 2, analysts are thinking twice about their advice to investors.
Morgan Stanley downgraded EA stock from a price target ot $126.00 to $120.00 this morning, causing some mild unrest among shareholders looking to make enough to buy Lamborghinis and Yugioh cards in this bull market.
While EA stock value has motioned upward during the past five weeks, most of that is due to strong support from the company's mobile and sports games along with general market confidence. Battlefront 2 recently had its sales estimate shifted down three million units, compounding several other miscalculations during the year.
Wall Street Analyst Brian Nowak had the following to say:
Recent disappointing Star Wars Battlefront 2 third party data (NPD and GfK ) cause us to lower our Star Wars unit estimate from 13mn in F3Q to 10mn. These lower unit expectations flow down to the bottom line.
EA recently caught fire like a dry Christmas tree after pushing highly invasive microtransactions into Star Wars Battlefront 2. The controversy became the most widely-discussed gaming topic of Fall 2017 and birthed thousands of memes. Generally speaking, the gaming community has returned to considering it a dislikable company, returning it to the days when it earned two Worst Company in America awards.
Battlefront 2 was slammed by millions of people who didn't play the game.
This news could trigger some sell off of stock at a time when Take-Two Interactive and Activision Blizzard, Inc. are looking like two of the hottest stocks to own during this year's bull market. The gaming industry is showing strong growth this generation thanks to Beethoven-esque performances by Sony's PlayStation 4, Nintendo's Switch, in addition to PC hardware.
EA will likely see reasonable growth this year in its valuation, but is currently being outpaced by the competition.