I’m no financial genius, which is about to become very apparent, but I do realise a bad thing when I see it and the fact that EA has lost 9% of its value overnight is a very bad thing indeed.
According to a report on CNBC the video game makers investors have been spooked by the fact that over 400 000 subscribers to it’s MMO title, Star Wars: The Old Republic, have jumped ship in the last quarter and there is little reason to believe that EA are going to be able to replace them anytime soon.
So that I get, 400k people leaving is a bad sign and therefore people are worried about their investment.
HOWEVER analysts had expected EA to report earnings of 16 cents per share on a revenue of $958 million and EA actually returned earnings of 17 cents per share on a revenue of $977 million.
This is still lower than last quarter but it’s higher than expected which confuses me, if they beat analysts expectations then why did everyone jump ship at that time. If they weren’t happy with what the analysts predicted then wouldn’t it rather make sense to jump ship earlier and cash in on the higher share price?
The end result however is simple enough to understand, EA has lost 9% of its share price overnight and unless they can turn Star Wars around we can logically expect them to lose more value moving forward.
Why they thought investing the most they’ve ever invested in a game into a Star Wars title was a good idea is anyone’s guess though, they usually end up terrible.
Last Updated: May 8, 2012