In other words, Electronic Arts is on fire. Apex: Legends is one of the market’s leading free-to-play battle royale franchises, and it’s latest season is off to a record start. Management has a huge opportunity to build on the success of Star Wars: Galaxy of Heroes and develop a robust mobile-oriented Star Wars gaming pipeline. Meanwhile, The Sims is about to turn into a reality TV show. Indeed, EA today is aggressively expanding its FIFA esports leagues. More than that, FIFA and Madden are perfect titles for esports. Continued growth in console-quality, free-to-play battle royale games like Fortnite.Įlectronic Arts, thanks to its robust and diversified portfolio of rich gaming content, is well positioned to capitalize on all these growth opportunities.īetween FIFA, Madden, The Sims, Star Wars, and Apex: Legends, EA’s content portfolio is wide enough, rich enough and diverse enough to sustain enduring popularity and demand amid rising video game engagement and sales over the next few years.Continued growth in the esports vertical, powered by 5G-driven improvements in streaming quality and a rise in consumer awareness as more and more leagues make their way onto ESPN, ABC and the like.The standardization of 5G technology, which will enable breakthroughs in cloud gaming, AR/VR capability and mobile gaming.New console launches, including a new Xbox and new Playstation console in late 2020, and a new Switch console in 2021.This industry, however, is on the cusp of meaningfully accelerating in the early 2020s, thanks to: Zooming out, the video game industry has been on a secular uptick over the past several years, as consumers have increasingly digitized their interactions and the industry has expanded its reach into the mobile arena. Instead, EA stock has ample firepower to keep powering higher at a steady pace for the rest of the year.ĮA stock can and will stay in rally mode for the foreseeable future, mostly because the fundamentals underlying the company and the entire video game industry will broadly improve over the next several months and years. The best of the rally has already happened. EA stock won’t rally another 30% over the next six months. They cite an extended valuation - shares trade at 27 times forward earnings, versus a five-year-average forward earnings multiple of 23x - and technical resistance - EA stock topped out around $150 in 2018 - as reasons why the best of this rally has already happened. Some investors are concerned this rally is on its last legs.
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