🎮 Electronic Arts: Games Are Forever?

RBLX Rips on Earnings. TSLA Crashes on China Sales.

Hey Global Investor, here's what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Tuesday's Close) 4,152.10 -36.33 (0.87%)

NASDAQ (Tuesday's Close) 13,389.43 -12.43 (0.09%)

FTSE 100 (5 PM IST) 6,961.75 -161.93 (2.27%)

NIFTY 50 (Today's Close) 14,696.50 -154.25 (1.04%)

USDINR (5 PM IST) 73.42 (1 Year -2.83%)  

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🔥 Top Movers

DDD +35.23%
RBLX +21.33%
SWAV +17.80%

RXT -20.86%
NVAX -13.91%
HBI -12.00%

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🎮 Electronic Arts: Games Are Forever?

Electronic Arts (EA) reported better than estimated Q4 results. The management expects sales to remain upbeat, even as the pandemic-driven boom fades. For video gaming platforms such as EA and its peers, the game seems to be getting hotter! (Tweet This)

A Quantum Of Solace
With outdoor travel restricted since the onset of the pandemic in 2020, people resorted to playing video games as a way to connect with others online. They found solace in this escape from reality. This demand brought multiple gaming platforms from obscurity into the limelight. Indeed, gaming was one industry that benefited multi-fold due to Covid-19.

Electronic Arts, like its peers - Playtika (PLTK), Roblox (RBLX) and SciPlay (SCPL), performed well as a direct consequence of the stay-at-home trend. But with vaccinations picking up pace, what’s the prognosis for these gaming platforms that hit the bull's eye last year? 

The challenge is further amplified for companies such as EA, who need to play a balancing act between generating new content and ensuring marquee brands such as FIFA and SIMS continue to cater to the established user base. The need of the hour for EA was to innovate and work hard to retain customers who were spoilt for choice. So far, the company has managed to ride out the tide. 

Play Another Day
EA has shown resilience, even as the boom from the pandemic is on the wane. This is evident from its quarterly results.

Key Stats for Q4:

• Revenue: $1.49B Vs $1.39B expected

• EPS: $1.23 Vs $1.05 expected (not including one-off adjustments)

EA has been on a buying spree as it looks to expand its gaming portfolio. In February, EA acquired Codemasters, known for its racing games, followed by Glu Mobile in April. Just last week, the company announced the acquisition of Baseball-game studio Metalhead Software. 

These acquisitions will act as catalysts for future growth given the diversity of content that now calls EA home. For FY22, the company expects sales to rise ~18% to $7.3B (compared to the analyst forecast of $6.6B). For the just-ended FY21, sales rose 15% Y-o-Y to $6.19B.

This performance is similar to its brethren. For instance, Roblox reported a sales jump of 140%; SciPlay's sales topped estimates by 4.5%; PlayTika, for its part, raised its full-year guidance by 6.5%. It seems like the pandemic-driven boost is not a flash in the pan after all. The investors, in the meantime, have a dilemma. What should they buy? Games or gaming company shares? Or both?

Market Reaction
EA ended the day at $141.36, up 0.5%. The stock gained as much as 3% in after-hours trading.

Company Snapshot 📈

EA 141.36 +0.71 (0.50%)

Analyst Ratings (33 Analysts) BUY 64%  HOLD 36%  SELL 0%

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Newsworthy 📰

• Fall: Tesla’s China sales tumble 27% in April from March (TSLA -1.88%)

• Fast Money: Google Pay now lets U.S. users send money to India and Singapore (GOOG -1.40%)

• Big Tech: Palantir reports 49% revenue growth for its first quarter (PLTR +9.42%)

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Later Today 🕒

• Toyota Motor Corp. Earnings (TM)

• BP Plc Annual General Meeting (BP)

• Adidas Annual General Meeting (ADDYY)

• 6:00 PM IST: Consumer Price Index & Core CPI

• 11:30 PM IST: Federal Budget for April

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Fun Fact of The Day 🌞

Blockbuster Video in 2000 turned down a chance to purchase a one-year-old company called Netflix for $50M

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