Electronic Arts Stock: Gaming Giant Slumps on Profit Warning

Electronic Arts experienced a dramatic stock plunge of over 17% on Thursday, wiping approximately $6 billion off its market capitalization after significantly lowering its annual forecast. The gaming company revised its revenue expectations for the current fiscal year from the original $7.50-7.80 billion down to $7.00-7.15 billion. This substantial downward adjustment primarily stems from disappointing performance in its FC 25 football game, particularly regarding in-game spending, which showed declining trends after two years of double-digit growth. Net bookings for the third quarter are projected at $2.22 billion, falling notably short of the initial $2.4-2.55 billion target.

Market Response and Analysis

The gaming industry giant's Live Service segment, which accounts for over 70% of company revenue, has been particularly problematic, with projections now indicating a mid-single-digit percentage decline. The "Ultimate Team" feature, where players purchase virtual currency for character acquisition, faces significant challenges. While a January update received positive feedback, it hasn't fully addressed the underlying issues, including technical problems and perceived lack of innovation. These developments have prompted several analysts to downgrade their ratings, citing concerns about competitive market conditions and uncertain product pipeline prospects.