Stock market analysts have dealt Electronic Arts a savage blow, recommending investors stay well away from a games publisher that appears to be spiraling downwards.
Seeking Alpha has branded EA stocks with an ‘Avoid’, claiming the ‘Fun Is About To End’. EA has been on the receiving end of both fan ire and gambling authorities lately, including the widespread loot box controversies, failed game launches and a barrage of disappointments for Star Wars fans.
Things are not looking up for EA despite its position as one of the most valuable games publishers in the world. Seeking Alpha believes investors should avoid EA despite the imminent launch of Anthem, outlining four chief reasons:
- A significant profit source for EA is quickly being declared illegal around the world.
- EA's customer neglect is driving down demand for its games, leading to heavy discounting for many of its new releases soon after launch.
- EA's mismanagement of valuable IP is causing significant shareholder value destruction.
- Insiders are selling stock heavily. Why would they do that if they believe price appreciation is likely?
On most of these fronts, it’s hard to argue with their line of thinking. The first is a matter of some debate though. EA has just removed microtransactions and the ability to buy FIFA 19’s virtual currencies in Belgium, although this hardly constitutes being “declared illegal around the world”. There is change afoot though, and EA’s capital relies extremely heavily on microtransactions.
In terms of customer neglect, EA hasn’t exactly been hitting a lot of home runs lately. Star Wars Battlefront 2 was a high profile failure, Need For Speed Payback was awful, Mass Effect Andromeda became an embarrassment, and Battlefield V isn’t exactly setting the world alight. I blame folks’ poor taste for the latter’s problems, but hey-ho.
Couple all of this with multiple Star Wars game cancellations and it's culminated in rapid erosion of consumer trust. You absolutely cannot be confident an EA-published game is going to be good anymore, and that’s totally down to its business decisions in recent years. Every game of theirs is being met with a ton of skepticism, including Anthem, meaning it’s an uphill battle for any title EA publishes.
Do you think EA has shot itself in the foot in recent years? What does it need to do to win fans back over? Let us know your thoughts below!