Why Shares of Electronic Arts Inc. Popped Today
What happened
Shares of video game giant Electronic Arts Inc. (NASDAQ: EA) jumped as much as 15% in trading Wednesday after the company reported fiscal fourth-quarter earnings. As of 12:51 p.m. EDT, the stock was up 14.3%.
So what
Revenue was up 16.7% in the quarter to $1.53 billion and net income fell 37% to $566 million, or $1.81 per share. The decline was largely attributable to an income tax credit in last year's quarter.
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Results topped the $1.49 billion in revenue and earnings of just $1.63 per share that analysts had expected. For fiscal 2018, management forecast earnings of $3.57 per share, below the estimate of $4.16 from analysts, but that's not the focus for investors today.
Now what
EA has made a solid transition to the new world of mobile games and digital downloads, getting $934 million of $1.53 billion in revenue from digital sources. The company's transition from dependence on hit games each year to a more consistent revenue model is giving investors confidence in the business's performance going forward. And with more and more people looking for ways to play games, whether it's on a smartphone or a new console, EA is well-positioned to offer compelling games that will be highly profitable for investors.
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Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.