EA - Electronic Arts Inc.
| Previous Close | 97.51 |
| Open | 97.44 |
| Bid | 0.00 x 800 |
| Ask | 0.00 x 1000 |
| Day's Range | 96.35 - 98.39 |
| 52 Week Range | 73.91 - 151.26 |
| Volume | 4,285,989 |
| Avg. Volume | 7,732,965 |
| Market Cap | 29.07B |
| Beta (3Y Monthly) | 1.37 |
| PE Ratio (TTM) | 21.13 |
| EPS (TTM) | 4.59 |
| Earnings Date | May 7, 2019 |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | N/A |
| 1y Target Est | 102.07 |
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7 Video Game Stocks on Steep Discount
[Editor's note: This story was originally published in November 2018. It has since been updated and republished to coincide with today's rout in video game stocks.]If you're looking for an investment sector that is very likely to rise higher, video game stocks are your ticket. The concept of the video game has evolved from nerdy niche to mass mainstream infiltration. Still, powerful fundamental tailwinds haven't prevented video game stocks from absorbing huge losses.Indeed, anywhere you look, the major (and minor) indices are flashing red. The broader markets finished 2018 down 6.2%, and our own Dana Blankenhorn, in November 2018, stated bluntly "we're already in a bear market." Any contrarian analyst would be hard-pressed debating Blankenhorn on this issue as the volatility persists into 2019.InvestorPlace - Stock Market News, Stock Advice & Trading TipsI'm certainly not going to attempt it, especially if I'm looking at esports and gaming stocks. The video game as an investment vehicle is a platform that has profited many investors handsomely over the years. Unfortunately, the declines in video games and esports stocks over the past year have forced everyone to rethink their assessments.I can't deny the obvious: This is a time when all market participants should strongly consider protective measures. We have many factors that are completely unrelated to video games but could end up roiling video game stocks. However, I'd also caution against overreactions. Recall that the Dow Jones lost double digits between late January and early February of 2018 … * 7 Invincible Stocks Leading The Bull Market Higher The point is to protect yourself from this violent storm, but also to realize that all storms eventually fade away, producing excellent deals only in hindsight. If you've got the nerve, here are seven video game stocks on serious discount. Sony (SNE)Source: Dalvenjah via FlickrWhen you think about the modern video game, you immediately think about Sony (NYSE:SNE). Admittedly, SNE stock has become a running joke within consumer-electronics circles for the underlying firm's other endeavors. For instance, its smartphone is nowhere near as popular as Apple's (NASDAQ:AAPL) iPhone, and it once ran a computer-monitor business.But don't ever question SNE stock for its part in advancing the video game to the mainstream.Its PlayStation console resonates deeply with consumers, and better yet, it keeps improving. Just a few days ago, Sony announced during the Consumer Electronics Show (CES) that the current-generation PlayStation 4 hit 91.6 million unit sales. More impressively, this tally occurred over roughly a five-year lifespan.Of course, the markets don't typically respond to past achievements. What makes SNE stock so compelling for the video game industry is corporate synergy. Make fun of Sony all you want, you can't deny its vast entertainment portfolio. Management can easily leverage this for exclusive titles, which they do frequently for marquee brands. Microsoft (MSFT)Source: Shutterstock Every great organization has an equally great competitor. In the war of supremacy for the video game, we have two top console-makers: Sony and Microsoft (NASDAQ:MSFT). The rivalry between the two tech giants is no joke for many gaming enthusiasts.Microsoft stopped reporting sales figures for its Xbox console, which understandably drew snide snickering, but estimates put it around the 40 million mark. Based on this, Sony is vastly outpacing Microsoft in the console wars. But that hasn't stopped MSFT stock from making significant gains in the markets.Part of the reason is that in terms of graphics and gameplay capabilities, Microsoft has largely gone toe-to-toe with Sony. Additionally, the house that Bill Gates built features its own batch of attractive exclusive titles, including the ultra-popular "Halo" series. Naturally, this has encouraged long-term investors to pile in on MSFT stock. * 10 Companies That Could Post Decelerating Profits And while I'm a Sony guy, I think Microsoft offers better overall stability. Along with its video-game business, it has a virtual lockdown on PC operating systems and various pieces of professional software. Plus, MSFT stock pays a much higher dividend, which isn't something to ignore at this juncture. Nintendo (NTDOY)Source: Shutterstock In my opinion, and those of fellow gamers, the architect of today's video game is Nintendo (OTCMKTS:NTDOY). However, other video game stocks have captured investors' attention. Moreover, as a Japanese over-the-counter name, NTDOY stock doesn't always generate positive news.That has proven especially true in 2018. Last year, NTDOY stock returned handsome monetary rewards for shareholders thanks to the Nintendo Switch. This spectacular console is actually a hybrid device. Nintendo designed the Switch primarily for home usage, but you can just as easily take it on the road. However, great news becomes old news quickly, and shares faltered.Still, the scope of the damage seems excessive. Over the past year, NTDOY stock has dropped a staggering 30%. While further losses are not out of the question due to the overall market panic, the bears are overlooking the company's long-reaching brands. For instance, the "Mario Bros." franchise is gaming gold, which Nintendo can leverage for profitable synergies. Electronic Arts (EA)Source: Shutterstock For anybody who has picked up a video game in the last decade, chances are, you fed the Electronic Arts (NASDAQ:EA) cash cow. From developing games for the Commodore Amiga -- does anybody remember that? -- to driving the latest innovations in esports, EA stock is a mainstay within the industry.That said, video game stocks have incurred horrific losses, and Electronic Arts was not spared in any way, shape or form. Since July 25, EA stock has hemorrhaged more than 43% of market value. Some of that was due to the poor outlook given in its first-quarter fiscal 2018 earnings report. But later losses stemmed from internal issues, such as the delayed launch for its heavily-anticipated video game Battlefield V.I understand why investors are now hesitant on EA stock. A few months ago, I provided my analysis on the company's extreme volatility. That said, my ultimate take is that Electronic Arts suffers from fixable problems. * Mizuho: 7 Long-Term Value Stocks to Buy Now Moreover, they leverage an enviable sports-licensing franchise. No matter what happens, throngs of gamers always eagerly await the latest iteration in the Madden or FIFA series. On the surface, such fandom seems irrational because the changes are minute. Still, the consumers are shelling out big bucks every year, so who am I to judge? Activision Blizzard (ATVI)Source: Shutterstock One of the biggest reasons why the video game industry has captured mainstream attention is the proliferation of the online shooter genre. And in this genre, no one does it better than Activision Blizzard (NASDAQ:ATVI).Over the last few years, ATVI stock has skyrocketed based largely on its Call of Duty franchise. Rather than being shunned by the real heroes in uniform, our military forces embrace these games. Earlier last year, Activision announced that it donated more than $100,000 worth of Call of Duty games to the United Service Organizations, or USO.However, like Electronic Arts, ATVI stock incurred heavy losses in the markets. Since the close of Oct. 1, Activision shares have tanked 40%. A major culprit is fierce competition, particularly from Epic Games' Fortnite.In the long-term, though, ATVI stock looks very intriguing. Over a year-and-a-half of market gains was wiped out in less than two months' time. That's a little bit over the top considering that the company levers one of the most popular franchises among video stocks. Nvidia (NVDA)Source: Shutterstock Semiconductor firms like Nvidia (NASDAQ:NVDA) started to light up the markets in 2016, and that momentum continued into last year. Unfortunately, we learned a physics lesson with NVDA stock: what goes up must come down.And shares are doing exactly that. What appeared to be a promising start for 2018 turned into a veritable nightmare. Between the January opener and the end of September, NVDA stock gained nearly 44%. Since the beginning of October, however, the company has tumbled over 48%, finishing the year down 31%.As a leader in advanced technologies, Nvidia took the brunt of the sector fallout. The geopolitical wrangling between the U.S. and China isn't helping matters. Plus, the severe plummeting in bitcoin prices is likely to negatively impact its crypto-mining-specific graphics processing units, or GPUs. * 7 Stocks to Buy That Are Run By Billionaires Nevertheless, I really like NVDA stock, especially at these prices. I'm not the only one, as notorious short-sellers Citron Research just recently reversed their bearish take on the company. While you shouldn't rush in simply based on one expert opinion, Nvidia offers exposure to multiple next-gen businesses. I doubt that NVDA will stay deflated for long. GameStop (GME)Source: Shutterstock In following with my usual routine of sticking speculative names in the back, I bring to you GameStop (NYSE:GME). GME stock is easily one of the riskiest investments among video game stocks. The company pays out a near-10% dividend, which tells you all you need to know.The other reason that GME stock is down -- aside from all the terrible factors that slammed valuations -- is related to its PR crisis. Many gamers hate GameStop because the retailer rips off customers who are looking to trade in their games and paraphernalia.That's true, but at the same time, you can't have it both ways. The reason why other gamers love GameStop is due to their extensive library of preowned products. In my opinion, it's far superior to online sales and subscription-based services due to its easy return policy: if you don't like a particular video game, just return it.This return policy is a major but underappreciated benefit for GME stock because many gamers are young. They (or their parents) may not have the funds for subscription services. GameStop gives these customers better pricing and superior flexibility.As of this writing, Josh Enomoto was long SNE and bitcoin. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Key Emerging-Market Stocks to Buy for Contrarian Investors * 7 Stocks at Risk of the Global Smartphone Slowdown * 7 Pharmaceutical Stocks That Just Raised Prices This Year Compare Brokers The post 7 Video Game Stocks on Steep Discount appeared first on InvestorPlace.
- Benzinga•17 hours ago
Battle Royale: Morgan Stanley Cautiously Upbeat On EA, Activision
A few months after the frenzied reaction to the launch of "Apex Legends" by Electronic Arts Inc. (NASDAQ: EA), attention is turning to whether interest will continue in the game that EA hopes will challenge "Fortnite" for supremacy in the battle royale arena. "Call of Duty" from Activision Blizzard Inc. (NASDAQ: ATVI) is going mobile, giving the company added opportunity in the fastest-growing games segment — and likely helping boost its stock Tuesday. Morgan Stanley’s Brian Nowak maintained an Equal-Weight rating on EA and raised the price target from $80 to $88.
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- InvestorPlace•2 days ago
Why the Status Quo Won’t Boost Activision Stock
It's not difficult to understand why some investors see Activision Blizzard (NASDAQ:ATVI) as attractive at current levels. After all, Activision stock is much cheaper than it used to be, having dropped some 47% from its early October highs.Source: Shutterstock And while the company's 2019 guidance was disappointing, ATVI stock still has some positive catalysts. The gaming market is still growing, and Activision Blizzard can tap into that growth with three attractive franchises. * Top 7 Service Sector Stocks That Will Pay You to Own Them On this site earlier this month, both Will Ashworth and Josh Enomoto have explained why investors should "buy the dip" of ATVI stock. Both authors made good points.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMoreover, Activision stock traded above $80 just a few months ago. It's one of the giants of gaming, along with Electronic Arts (NASDAQ:EA) and Take-Two Interactive (NASDAQ:TTWO). Some of the company's headwinds should fade, and it should resume growing.But I've been skeptical about ATVI stock for a long time, and even after its pullback, I'm not ready to turn bullish on Activision stock. Trading at 21 times the company's 2019 earnings per share guidance, excluding certain items, ATVI is not necessarily cheap. And from a broader standpoint, I'm still not sure whether Activision's growth can accelerate going forward.For the past decade, ATVI 's profits haven't increased much, especially in metrics other than earnings per share. Looking forward, ATVI still needs to show that it can raise its bottom line before investors should jump into Activision stock. Two Brilliant MovesBack in 2010, Activision generated 79 cents of adjusted EPS. In 2019, the company provided EPS guidance of $2.10, again excluding certain items.Over the nine years, that's an 11.4% compound annual growth rate (CAGR), even though the company is expecting its EPS to decline sharply this year from the $2.72 of adjusted EPS it reported in 2018. Still, averaging annual EPS growth of more than 10% over a decade seems to suggest that Activision's business is performing well, while its profits are steadily growing.That's not really the case, however. Over that stretch, Activision's EPS spiked twice. In 2013, ATVI repurchased Activision stock from its former majority shareholder, Vivendi SA (OTCMKTS:VIVHY). That deal boosted Activision's EPS by over 25%. Three years later, ATVI bought Candy Crush developer King Digital Entertainment for $5.9 billion.Both deals were brilliant. ATVI paid $13.60 per share for the ATVI stock it acquired from Vivendi. Activision stock, of course, is up more than 200% from those levels even after its recent declines. And the King deal was risky, as many observers thought that Candy Crush's revenue was poised to decline. Instead, its bookings have continued to grow, while the success of Zynga (NASDAQ:ZNGA) has further demonstrated the resilience of the social-gaming space.Again, both deals were great moves by Activision management. But those moves aside, the company's business simply hasn't been that impressive. Activision Stock's Growth ProblemBack in 2010, ATVI generated adjusted net income of $991 million. In 2015, the figure had actually dropped to $975 million. But since the Vivendi deal shrank the amount of Activision stock outstanding, the company's EPS rose to $1.32 in 2015, versus the 79 cents that it had reported five years earlier.King, meanwhile,added $600 million to ATVI's net profit, while tax reform tacked on over $100 million in 2018. Even if ATVI's business doesn't grow at all this year, its net income would still reach about $1.7 billion.However, the company's EPS guidance indicates that its net income will come in at just $1.63 billion. Even accounting for the fact that Activision historically has guided conservatively and excluding King's contribution, ATVI will probably wind up generating close to zero pre-tax profit growth between 2010 and 2019.That's nine years in which the economy has been good. Additionally, the increased popularity of digital downloads should be boosting the company's revenue and margins, as middlemen like retailer GameStop (NYSE:GME) have been cut out of many transactions. And demand for video games - both in the U.S. and overseas - has steadily risen.With all those benefits, the earnings of Activision Blizzard's business has not grown this decade. ATVI made two great deals, but its business has been stagnant. What Can Boost ATVI Stock?In that context, the question going forward is: what changes can provide a catalyst for Activision stock? And I'm not sure that Activision has provided an answer.ATVI did announce last month that it would restructure and lay off roughly 775 of its employees. That should save it some money, but hardly enough to move the needle. Even $100 million of savings would only boost its earnings by about 6%. And the company's plan to "refocus its resources on its largest opportunities," as the company put it in an 8-K filing, raises yet another question. What, exactly, are those opportunities?The company's core franchises - Candy Crush, Call of Duty, and World of Warcraft - still are performing reasonably well. For a long time, many people have thought that World of Warcraft, for instance, has been poised to decline. But according to Activision's 10-K, the game's net bookings rose year-over-year in 2018. The same is true for the company's other two key franchises.Still, those games aren't growing all that quickly. And since they only account for 58% of its total revenue, they certainly won't be profitable enough to support the company's 20+ P/E multiple.Meanwhile, the rest of the company's portfolio appears to be struggling. Overwatch generated over 10% of the company's revenue in 2017 and less than 10% of it in 2018, according to the company's SEC filing. The company stunned investors in January by basically giving away Destiny. Hearthstone, and Diablo has faded.And now Activision Blizzard is blaming the decline of its earnings in 2019 to a light slate of new products and responding by laying off employees. Was Activision carrying dead weight for years? Or are there simply not that many opportunities for ATVI to chase?In any event, Activision needs an answer to the broader question: what can jump start its growth? The profit growth of its old games isn't going to suddenly start to accelerate. Its newer games are declining, and it doesn't have another hit on the horizon right now.That' outlook is not good enough to support the current valuation of Activision stock. Unless Activision's management can convince investors that it has a better plan, Activision stock probably won't rally.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Financial Stocks to Invest In Today * 7 Single-Digit P/E Stocks With Massive Upside * 5 Chip Stocks on the Rise Compare Brokers The post Why the Status Quo Won't Boost Activision Stock appeared first on InvestorPlace.
- Markit•2 days ago
See what the IHS Markit Score report has to say about Electronic Arts Inc.
Electronic Arts Inc NASDAQ/NGS:EAView full report here! Summary * ETFs holding this stock are seeing positive inflows * Bearish sentiment is low * Economic output in this company's sector is expanding Bearish sentimentShort interest | PositiveShort interest is extremely low for EA with fewer than 1% of shares on loan. This could indicate that investors who seek to profit from falling equity prices are not currently targeting EA. Money flowETF/Index ownership | PositiveETF activity is positive. Over the last month, ETFs holding EA are favorable, with net inflows of $14.05 billion. Additionally, the rate of inflows is increasing. Economic sentimentPMI by IHS Markit | PositiveAccording to the latest IHS Markit Purchasing Managers' Index (PMI) data, output in the Consumer Goods sector is rising. The rate of growth is strong relative to the trend shown over the past year. Credit worthinessCredit default swapCDS data is not available for this security.Please send all inquiries related to the report to score@ihsmarkit.com.Charts and report PDFs will only be available for 30 days after publishing.This document has been produced for information purposes only and is not to be relied upon or as construed as investment advice. To the fullest extent permitted by law, IHS Markit disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. Please view the full legal disclaimer and methodology information on pages 2-3 of the full report.
- TheStreet.com•2 days ago
ESports Hype May Be Creating a Bubble
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Market Realist•2 days agoEA’s Strategy behind Making Apex Legends Successful
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- InvestorPlace•3 days ago
2 Reasons Take-Two Stock Is the Easy Pick to Own in the Video-Game Business
The past six months have been tough ones for video-game stocks like Take-Two Interactive Software (NASDAQ:TTWO) and Activision Blizzard (NASDAQ:ATVI).Source: Via RockstarActivision shares are off nearly 50% from their September peak, while Take-Two stock is down about 35% during the same time period. Electronic Arts (NASDAQ:EA) has lost nearly a third of its value even after rebounding strongly from December's lows. * 7 Small-Cap Stocks That Make the Grade And to be fair, much of the stocks' plunge was deserved. Most of these names were overextended by the middle of last year, and investors were shocked to see just how easily the free online game Fortnite came out of nowhere and was so disruptive to the status quo.InvestorPlace - Stock Market News, Stock Advice & Trading TipsEverything about the video-game market is fluid, though, including its stocks. This dip, however, is an opportunity to step into the smallest but arguably the best-of-breed in the business… Take-Two stock. TTWO Wins the Console Loyalty WarsTake-Two is the name behind hits like Red Dead Redemption and the Grand Theft Auto series. Although its Grand Theft Auto franchise is the most successful video-game series ever in terms of revenue, TTWO has developed many fewer games than rivals like EA and Activision.TTWO also produces distinctly different kinds of game that may be counterintuitive on the surface. However, they are great money makers.Contrary to popular belief, gaming consoles like Microsoft's (NASDAQ:MSFT) Xbox and PlayStation from Sony (NYSE:SNE) are still a big deal. Although it is true that PC gaming is growing, console-play is also still growing, and its rising tide is lifting all boats.The industry's response to the expansion of the PC-games market has largely been to attempt to be all things to all people. EA now offers subscription-based access to PC-only games via its Origin Access program, while Microsoft now enables subscribers to its Game Pass service to access PC-based games.TTWO has tiptoed down the same path too, although not as much as its competitors. Over the course of the past three quarters, 85% of its revenue came from console players.It's a detail some investors find interesting, if not outright concerning. There's a method to Take-Two's madness, though.Rather than spreading its wings too far, the company has thus far focused on what it knows it does best: making great console games.A PC version of Grand Theft Auto V was eventually released, but it wasn't a priority. Meanwhile, although there are rumors that a PC version of Red Dead Redemption 2 will be released, it also doesn't appear to be a priority for the company.The strategy is effective and positive for Take-Two stock, even if it ultimately limits the company's top line. Staying in the Good Graces of GamersMost investors who aren't avid video-game players may not realize it, but regular players will readily recognize another not-so-subtle shift in the gaming business: the advent of in-game purchases called microtransactions. The latter phenomenon has grown from being a fun and easy way to enhance game-play for a couple bucks to a full-blown profit center in and of itself.The matter reached a fever-pitched frenzy in late-2017, after EA launched a new game. Gamers quickly learned the hard way that to be able to use some of the coolest weaponry or play as some of the coolest characters required either a massive amount of playing time or $80. That's more than buying the game cost.In-game purchases haven't gone away since then. Although most game developers have pushed them less aggressively recently, they're still a problem. The industry hasn't yet seemed to figure out what's fair when it comes to in-game purchases and where gamers draw the line.Take-Two has exercised considerably more restraint than its rivals have, however. Through the first nine months of the recently-ended fiscal year, only about one-third of the company's revenue came from what TTWO described as "recurrent consumer spending." The other two-thirds was driven by selling games.For perspective, a year ago Activision Blizzard reported that it had taken in more money from microtransactions than it did from actually selling video games.Many players claim they don't like the new normal, and some vowed to boycott EA in response to what they saw as its overly aggressive microtransaction tactics. But most complainers never follow through on their promises.On the flip side, it's also quite likely that many gamers haven't complained -- vocally -- at all, yet gravitate toward games like Take-Two's that don't cost quite so much to make the most of and are seen as a much better value. If that's the case, it's certainly a positive attribute for Take-Two and Take-Two stockTTWO CEO Strauss Zelnick has made a point of advancing the microtransaction minimization strategy explaining last year "Are you a monetization company or are you an entertainment company? We're an entertainment company and when we get that right, everything else flows from it." The Bottom Line on Take-Two StockWhile TTWO has worked its way into the upper echelon of game-publishing outfits by being the least typical company in the business, it's not bulletproof. It suffers the same cyclical swings that its rivals and console technologies do. The recent selloff of Take-Two stock illustrates that point.Nevertheless, Take-Two seems to fare better against headwinds than its rivals, and Take-Two stock bounces back better than the shares of its rivals do when disruptions like Fortnite come down the pike.Not every investor has to own Take-Two stock. But for investors who have to own a video-gaming name, Take-Two stock is an easy name to buy and just let simmer. It's even easier to buy TTWO stock on a dip like the one it just experienced.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Single-Digit P/E Stocks With Massive Upside * 7 Best Quantum Computing Stocks Trading Today Compare Brokers The post 2 Reasons Take-Two Stock Is the Easy Pick to Own in the Video-Game Business appeared first on InvestorPlace.
- InvestorPlace•3 days ago
Electronic Arts Should Be Buying Back Way More EA Stock
If you're a long-term owner of Electronic Arts (NASDAQ:EA), the volatility exhibited by EA stock since announcing Q3 2019 earnings is enough to drive a teetotaler to drink.Source: Electronic ArtsRather than address whether you should be buying EA stock at under $100 (I recommended investors consider it earlier in March) I'd like to address whether the company should be buying back its stock at current prices. The Argument for Buybacks of EA StockFirst, if you do own EA stock, you better hope Electronic Arts was buying it shares in the aftermath of its third-quarter earnings miss. The company's shares dropped more than 13% February 6 on the news, EA stock's worst single-day performance in over a decade.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAlthough it took the company's stock only two days of trading to recover, jumping from $80.21 after the Feb. 6 close to $97.24 two days later, a 5% increase from its February 5 closing price of $92.52. At the end of the third quarter, Electronic Arts had $1.59 billion left of its $2.4 billion share repurchase program initiated in May 2018. In the first nine months of fiscal 2019, Electronics repurchased 10.4 million of its shares for $1.1 billion, an average price per share of $108.53. * 7 Small-Cap Stocks That Make the Grade So, if the company were willing to buy back more than a billion dollars of its stock at prices well above $100, I would argue that it should spend at least that to buy EA stock at prices below $100. For example, let's assume that it invested an additional $1.1 billion at a share price halfway between $80.21 and $92.52. At $87.37 a share, Electronic Arts would have repurchased 12.7 million shares, an additional 24% from the number it acquired in the first nine months of fiscal 2019. That's a nice thought, but in the real world, it would never happen for two reasons. First, it's unlikely that EA is set up to act this quickly, given its share repurchase history. Secondly, it's averaging approximately 1.2 million shares a month so far in fiscal 2019, well below the theoretical amount of 12.7 million shares from above. It's a nice thought, just the same. The Argument Against EA Share RepurchasesMost companies do a terrible job repurchasing shares. For every example you can give me of a company that's managed to buy back its stock near the 52-week low, I'll give you ten that bought closer to the 52-week high. How did EA do through the first nine months of fiscal 2019?Between March 31, 2018, and December 31, 2018, it had a high of $151.26 (July 13) and a low of $73.91 (December 26), for a midpoint of $112.59 a share. The company paid 3.6% less than its midpoint, a decent, if not spectacular job of buying back its stock. The question that I would have is whether it can continue to buy below its midpoint. Most companies, in my experience, can't, which would suggest the funds would be better used continuing to develop additional free-to-play games. The VerdictLong term, I think $108.53 a share paid by Electronic Arts for its stock will look like an astute investment. Below this point, I see no reason why the company shouldn't be buying back its stock by the boatload. Buy away, EA, buy away. As of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Single-Digit P/E Stocks With Massive Upside * 7 Best Quantum Computing Stocks Trading Today Compare Brokers The post Electronic Arts Should Be Buying Back Way More EA Stock appeared first on InvestorPlace.
- Motley Fool•5 days ago
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Tencent Stock Still Is at the Mercy of China’s Video Game Regulators
It's best known as the owner of online messaging platform WeChat, and then for its stakes in dozens of other tech firms inside and outside of China. More than anything else, though, Tencent Holdings (OTCMKTS:TCEHY) is a video game publisher. Most prospective and even current owners of Tencent stock just don't realize it.Source: Shutterstock It matters. Early last year, Chinese regulators stopped approving new games altogether.Although they finally started to issue licenses again in December, curiously, none of those newly-approved titles came from Tencent. It did finally happen in late January, with two Tencent titles getting the green light.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMany more are in the queue though, and regardless, the damage has already been done. In the second quarter of last year, Tencent reported its first year-over-year earnings dip in thirteen years. * 15 Stocks Sitting on Huge Piles of Cash Things didn't get much better in the subsequent quarter. Indeed, in November the company announced it was cutting its marketing budget for a handful of games until there was some clarity as to win the normal pace of approvals would be restored.That still hasn't happened, although there's a light at the end of the tunnel. Right Business, Wrong TimeFor the record, while Tencent drives more revenue from video games, they still don't account for a technical majority of its sales. During its third quarter of last year, 32% of its top line was driven by online games. The next-biggest contributor was its social networking platforms, mostly WeChat, accounting for 22.5% of its business. The rest is made up of online advertising revenue.Still, games are its biggest business. In fact, the odds are good Tencent's online gaming arm sports better-than-average profit margins.Those margins have been pressured of late too, as the fast-moving and hyper-competitive mobile gaming market all but requires a flow of new titles.Case in point? Fortnite, which was developed by Epic Games, which happens to be 40% owned by Tencent. The online battle royale hit caught rivals like Electronic Arts (NASDAQ:EA) and Activision Blizzard (NASDAQ:ATVI) off-guard. Both have since adapted, but those responses didn't sway gamers or analysts at first, but eventually they did.In July of last year, the game's revenue growth slowed to a crawl, even before other game developers were able to begin marketing their rival games. It points to the limited life span of all video games.The game developer hasn't been able to offset that headwind though, thanks to a seemingly-targeted effort to chip away at its dominance, perhaps for its partnerships with U.S. companies against a backdrop of strained trade ties.Epic Games is based in North Carolina, while another partner called Glu Mobile (NASDAQ:GLUU) is based in California. Without explicitly saying so, China's regulators are favoring home-grown developers and punishing publishers with American ties.Or, perhaps China's video gaming regulators are concerned with nothing more than the violence and game-addiction they say they are. Tencent's game "Honor of Kings" is not only China's favorite and best-grossing title, it's also a violent fighting game.Whatever the reason, it's been slow, tough going for the company on this key front. Looking Ahead for Tencent StockAlthough it will never be clear if it's political, practical, or just coincidental, whatever the reason for the regulatory headwind it's working against Tencent stock.Still, working against Tencent stock. Although the company got a couple of new titles approved in January, the country's regulators suspended new application acceptance altogether, hoping to clear out a backlog of at least 5,000 titles that had been submitted since China's government stopped approving games in March of last year.There's no word as to when it will start accepting requests again, and only one new Tencent game called Journey to Fairyland 2 has gotten the green light since January's two approvals.In the meantime, Tencent only can wait.Investors can't wait though, not knowing when or even if the company will be able publish a new title. As is the case with all video games, Tencent runs the risk of its existing lineup of games losing players, chewing away at growth and profits.The one upside? It will be anything but a secret if China's overseers pick up the pace of new game approvals. The company will also be sure to share it when its games receive permission to be marketed.Tencent knows the key people watching TCEHY stock are making buy/sell decisions largely based on how accommodative regulators seem like they're going to be going forward.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 of the Best Stocks to Buy Under $10 * 7 Retail Stocks Winning in 2019 and Beyond * The 10 Best Stocks to Buy for the Bull Market's Anniversary Compare Brokers The post Tencent Stock Still Is at the Mercy of China's Video Game Regulators appeared first on InvestorPlace.
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