Publisher Electronic Arts is taking a small beating on Wall Street.
EA’s stock is at $64.70 in after-hours trading, which is down more than 7 percent from its closing price of $69.79 when the final bell rang earlier today. Investors are spooked that the publisher, coming off a big win with Star Wars: Battlefront, doesn’t have quite the same expectations for the rest of its fiscal 2016 as analysts were predicting — and this likely has the notoriously skittish Wall Street investors worried that this is a peak for EA.
Wall Street analysts were expecting EA to predict earnings for its fiscal fourth quarter, which ends March 30, of 50 cents per share. EA instead went with 40 cents per share. That’s on estimated revenue of $875 million — where Wall Street was looking for $917.6 million. That’s a sizable gap.
EA does have a few more games shipping this quarter — although they are not on the level of Star Wars or Madden. Early in February, the company will ship a small puzzle platformer called Unravel. Later that month, it’ll have the colorful shooter Plants vs. Zombies: Garden Warfare 2. Finally, it’ll launch EA Sports UFC 2 in March.
Of course, the company isn’t only reliant on new releases. It could see a boost if it were to launch paid downloadable content for Star Wars: Battlefront. But clearly, the company doesn’t want to build up expectations it doesn’t know it can deliver on.
Finally, it’s worth pointing out that EA has had a streak of beating Wall Street expectations. And that’s likely due in small part to chief financial officer Blake Jorgensen’s willingness to make conservative estimates for future performance. It’s possible we’re see that here as well.