Electronic Arts (NASDAQ:EA) just took a major hit, with shares plunging 18% this morning, after the company cut its revenue guidance. EA had initially forecast mid-single-digit growth in live service net bookings for fiscal 2025, but is now bracing for a mid-single-digit decline, primarily due to weaker-than-expected performance of its Global Football franchise . This is a sharp reversal after two years of double-digit net booking growth, with FC 25 losing momentum in the third quarter. On top of that, Dragon Age: The Veilguard failed, engaging only 1.5 million players, 50% below expectations. As a result, EA now expects third-quarter net bookings of $2.215 billion and has revised its full-year outlook downward to a range of $7.0 billion to $7.15 billion.
The market did not welcome the news. Oppenheimer cut its price target from $165 to $140, calling this EA’s biggest forecast reduction since fiscal 2019. Stifel, Baird and BMO Capital Markets followed, reducing their targets to $133, $158 and $145, respectively. Analysts are particularly concerned about the slowdown in global soccer, with the franchise having long been EA’s cash cow. The stock still trades at a P/E of 36.5x, but with the live services revenue model under pressure, investors are wondering if EA can maintain its profitable streak.
Despite the chaos, EA management is holding strong. CEO Andrew Wilson highlighted a major gameplay refresh for FC 25 that is garnering positive feedback and reiterated EA’s commitment to balancing future growth with cost discipline. The company is betting big on its next wave of franchise launches to turn things around in fiscal 2026. But with competition intensifying and uncertainty looming, all eyes are on the company’s earnings call. EA on February 4 to see if this is just a rough patch or a deeper problem. .
This article was first published on GuruFocus.
