What Happened?
Shares of video game publisher Electronic Arts (NASDAQ: EA) jumped 5.8% in the morning session after the company reported strong first-quarter financial results that surpassed expectations, overshadowing a weaker outlook for the upcoming quarter.
The video game publisher announced strong preliminary financial results for its first quarter, reporting net revenue of $1.671 billion and net bookings of $1.298 billion, both of which surpassed expectations. Despite the strong performance, the company also issued a weaker-than-expected forecast for its second quarter, which initially caused the stock to dip in after-hours trading. The company attributed the softer outlook to the timing of revenue recognition for upcoming game releases and increased marketing expenses. However, investor sentiment appeared to shift, focusing on the current strong results over the future guidance. The positive move was also supported by B of A Securities, which raised its price target on the stock to $168 from $166.
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What Is The Market Telling Us
Electronic Arts’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 3.2% on the news that the company received a vote of confidence from Wall Street. Analyst Alicia Reese at Wedbush reaffirmed an "Outperform" rating on the stock. An "Outperform" rating suggests the analyst believes the stock will achieve returns superior to the broader market average.
Electronic Arts is up 8.5% since the beginning of the year, and at $158.32 per share, it is trading close to its 52-week high of $167.97 from November 2024. Investors who bought $1,000 worth of Electronic Arts’s shares 5 years ago would now be looking at an investment worth $1,142.
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