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Electronic Arts Stock Has Been on the Rise since Quarterly Results

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Electronic Arts stock up 21% in January 2018

US-based (SPY) gaming company Electronic Arts (EA) rose 21% in January 2018 to close at $126.96. EA stock has risen 52% in the last 12 months and generated returns of 33% in 2017. EA stock is now trading 58% above its 52-week low of $80.4 and 3.1% below its 52-week high of $131.01. Peers Activision Blizzard (ATVI), Zynga (ZNGA), and Take-Two Interactive (TTWO) generated returns of 17%, -10.5%, and 15% last month, respectively.

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Fiscal 3Q18 results

EA stock has risen 7% and 8% in the last two trading days after the firm announced fiscal 3Q18 results. EA reported revenue of $1.2 billion in 3Q18, which ended in December 2017, with a net loss of $186 million or $0.60 per share. Net loss rose significantly due to a $176 million tax expense, which was an outcome of the recent tax law.

On a non-GAAP (generally accepted accounting principles) basis, EA reported revenue of $1.97 billion compared to analyst estimates of $2.00 billion. In 3Q18, digital revenue for EA rose 14% YoY to $780 million, which is an indication of improving profit margins for the firm. Driven by digital sales and improvement in profitability, EA’s operating cash flow was $849 million at the end of 3Q18.

EA’s guidance for 4Q18 drove shares of the firm higher. The firm expects revenue of $1.5 billion with net income of $579 million and EPS (earnings per share) of $1.86. Bookings for 4Q18 are expected to be $1.23 billion, easily beating analyst forecasts of $1.18 billion.

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