Shares of Electronic Arts Inc. (NASDAQ: EA) jumped 10.4% in July, according to data provided by S&P Global Market Intelligence, after earnings and increasing expectations for the gaming industry pushed shares higher.
Continue Reading Below
Earnings weren't released until late in the month, but anticipation was high heading into the quarter, particularly as new titles like FIFA 18 and Madden NFL 18 are prepped for store shelves. Fiscal first-quarter revenue rose 14% to $1.45 billion, and operating income was up 33% to $743 million despite the lack of hit new games in the quarter.
Digital revenues, which are more consistent and higher margin than game sales in stores, were 63% of trailing-12-month sales and up 23% over that time. With FIFA Mobile now at 95 million users and games like NBA LIVE Mobile moving to live platforms, there will be growing ways to monetize live user experiences. And that will continue to drive financials if EA can keep making hit games.
Video games continue to be a hot business, and as EA transitions to more digital sales from mobile devices or expansion packs, it will make more money and be less reliant on each game being a big hit right out of the gate. It can incrementally improve and find ways to monetize content as users adopt a game, as it has done with live sports games. The fiscal first quarter was another step in the right direction, and with big game releases coming in the fiscal second and third quarters, EA's stock could just be heating up for the year.
10 stocks we like better than Electronic ArtsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Electronic Arts wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 1, 2017