Shares of Electronic Arts (EA) have plummeted by more than 16% this week, equating to a $6 billion loss in market value. The steep decline follows disappointing performance reports for both FC 25 and Dragon Age: The Veilguard, which failed to meet the company’s expectations.
On Wednesday, EA issued a warning to the market, revising its financial outlook for the fiscal year. The company now anticipates a decline in live service gaming revenues, contrary to its earlier forecast of growth. The primary driver behind this adjustment is the “slowdown” in FC 25 during the critical holiday season.
Adding to the challenges, EA reported that its October release of the RPG Dragon Age: The Veilguard underperformed, achieving only 50% of the expected results. The game attracted just 1.5 million players, significantly below the company’s targets.
By Thursday, EA’s market capitalization had fallen by $6 billion from its previous $37.3 billion valuation. The FC franchise, a cornerstone of EA’s portfolio, generates approximately $2 billion annually, with around $800 million attributed to the Ultimate Team feature, according to Reuters.
Key Takeaways:
Significant Stock Decline: A 16% drop in EA’s stock value represents one of the company’s most substantial recent setbacks.
Live Service Revenue Impact: The underperformance of FC 25 has led to a revision of live service revenue projections.
Dragon Age Struggles: The RPG title has underwhelmed, with player engagement far below expectations.
Franchise Dependence: EA’s heavy reliance on its flagship franchises like FC and Ultimate Team underscores the broader impact of such performance issues.
Future Outlook:
While EA has faced setbacks, its legacy franchises and strong Ultimate Team revenue streams may provide a foundation for recovery. The company’s next moves will likely involve addressing player feedback, improving game updates, and refining marketing strategies to regain investor and consumer confidence.
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