EA Stock to Ride High on the Digital Platform
Today’s stock is a classic play on the rising trend of mobile gaming in the entertainment industry. As the usage of mobile phones becomes more ubiquitous around the world with more powerful chips, investors can make a handsome amount of money by investing in gaming stocks that are most likely to benefit from this boom in mobile gaming.
There are a number of stocks in this market which could make the choice difficult for a potential investor. However, there are a few stocks that have been posting impressive growth as well as positioning themselves to capitalize on the tremendous potential in the future.
The case in point being Electronic Arts Inc. (NASDAQ:EA), which is making all the right moves to cash in on this fast-growing trend of digital and mobile gaming. The company leads globally in digital interactive entertainment and publishes games that can be played on a variety of platforms like game consoles, mobile phones, tablets, and personal computers. This is one of the biggest catalysts for Electronic Arts stock.
According to research by SuperData LLC, the digital games market hit $91.0 billion in the year 2016, which turned out to be the biggest year in the digital games and playable media market. Out of this total market, mobile games accounted for $41.0 billion. As per the report, the games and playable media audience is now one of the most valuable and engaged demographics. (Source: “Market Brief – Year in Review 2016,” SuperData LLC, December 2016.)
The market for interactive entertainment is highly competitive and changes rapidly as new products and platforms are introduced. But Electronic Arts is up to the challenge.
The company’s games are like live services, which are updated and improved for non-stop fun. This strategy has been central to the digital transformation that the company has planned for itself. Battlefield 1 is a great example of this, with more than 19 million players joining the game through the end of fiscal 2017. On the mobile platform, Star Wars: Galaxy of Heroes has one of the most engaged player communities.
The industry is being reshaped by the introduction of the concept of games as a service. EA is in a great position to benefit from this transition as it is investing in its digital platform that connects players across games, devices, and franchises. This platform also provides more data to the company about its games, which leads to more innovative offerings. The company has more thrilling experiences lined up for FY18, which will be a great boost for EA stock.
Not only this, the company is also focused on competitive gaming and eSports, which are fast emerging as popular segments of the market and will play a key role in the growth for the company going forward.
Also Read: Top Gaming Stocks to Invest in for 2017
On the earnings front, Electronic Arts posted strong numbers for the fourth quarter of FY17. Revenues and earnings were higher than guidance and were driven primarily by strong player engagement across the company’s portfolio of top quality titles for console, mobile, and PC.
As the company prepares itself for its transition to a digital and mobile future, EA stock has returned 42% in the year to date as compared to the nine percent returned by the S&P 500 index. Over the last five years, the gains have been a spectacular 812%. Given the current strategies being followed and the favorable momentum, Electronic Arts stock can post further triple-digit returns in the coming years.
Chart courtesy of StockCharts.com
The Bottom Line on EA Stock
Electronic Arts is developing great interactive entertainment for its consumers and is well-positioned to gain from the rising trend towards mobile and digital gaming. The financial performance of the company proves that the management is executing well and, as the company portfolio continues to grow, more gains are likely to follow.
Using the advancements in deep learning, artificial intelligence, and social layers, the company is building new ways to connect players and personalize their experiences.
As the video game publisher prepares itself for more creativity across many of its top franchises, investors will have a lot to look forward to in the coming years. Things will get more exciting for EA stock and investors could reap rich rewards in the coming years.