Electronic Arts stock sinks as the company delays, shelves game titles

Yahoo Finance tech editor Daniel Howley joins the Live show to discuss Electronic Arts' falling shares as the gaming developer continues to announce delays for its landmark titles and mobile games.

Video transcript

DAVE BRIGGS: I'm the loser. I get the loser. That's Electronic Arts, EA a trending ticker on Yahoo Finance, falling-- look at this, folks-- almost 10% today after execs disclosed the gaming company missed on holiday sales and its early guidance for next year came in lower than expected. EA also announcing it's shelving the mobile versions of two very popular games. Apex Legends and Battlefield, the moves are expected to result in layoffs, but no numbers were provided in terms of how much they would reduce headcount.

Electronic Arts also announcing a delay. This was late yesterday of Star Wars Jedi Survivor from March to late April. Overall, look, that whole gaming sector has been just pounded coming out of the pandemic when you saw people staying at home, playing more games, dramatic increase like a lot of tech companies, although they didn't bounce back the way big tech has. Gaming looks like a tough road ahead.

SEANA SMITH: Gaming certainly does look like a tough road ahead when you take a look at the analyst reaction here to these results. Cowen saying that there was disappointment across the board. Hopefully, though, they were saying that management has really set the bar low because when you take a look at EA's performance, at least in 2022, they fared much better than many of its competitors.

It was in negative territory. It was off about 7%, but comparing that to the losses that we saw in Take-Two, clearly just a drop in the bucket there. In terms of the loss that we're seeing today, the worst one day performance that we have seen in EA since February 2019. You talk about gaming, you talk about the fact that the consumers are pulling back on their spending.

Many of these companies have been under a tremendous amount of pressure now for quite some time. And that drop today puts it just around $116 a share, flirting with that $100 level, which we know is so critical here for that company. But Dave, when you take into account that consumers are pulling back, I think the big question is where that growth is going to come from and where not only gaming is positioned in all this, but all of those consumer-facing names.

DAVE BRIGGS: Yeah, it's just going to be a very difficult road. I mean, there's no different way to spin this than the way I just did. Like, it was skyrocketing four of those years that people stuck at home and playing games. And then coming out of the pandemic, we're not seeing the same bounceback that we're seeing from Amazon, that we're seeing from Meta, that we're seeing from most of the tech giants, as the NASDAQ continues to outperform the Dow and the S&P.

And largely speaking, that whole gaming sector has been left behind. And you're seeing that in some of the chip stocks early on as well. Dan Howley, do you want to chime in on this, my friend, on terms of Electronic Arts moving forward, cutting a couple of mobile games, delaying that Star Wars game, and the road ahead for EA?

DAN HOWLEY: This also isn't the first time that they've delayed the Star Wars game. And look, delays happen in the video game industry, obviously, but part of the problem with what we saw in 2022 was that so many games were delayed. And so we figured, OK, they're going to go into 2023. We'll start to see the games happening in 2023. And now there's further delay. So this is a larger problem. RA isn't the only one that does cut games. Ubisoft had cut games prior to this as well.

One of their big games, "Skull and Bones," was also delayed again, something that they've had happened before. And so this is going to be something that I think is going to hound the gaming industry going forward. The good side of this is, at least not necessarily for EA, but for gaming in general, is that, look, Sony says that PlayStations are available now, not necessarily good for them. There was a report that the PlayStation VR2 isn't getting as much love as people had hoped.

There's not as many people signing up for it. Sony basically said that's not true. People still want it. Microsoft doing relatively well. But they're not putting out enough games that people necessarily want. We're still waiting on some big names from them. I think I read yesterday someone was like, we've given Microsoft the benefit of the doubt for too long in gaming now.

DAVE BRIGGS: Well, the good news is for Microsoft, they are the ones that are going to benefit from ChatGPT, $10 billion investment there. We talked about how Baidu is launching their own version of ChatGPT. But the big announcement today is of a paid version of the AI, and that's been the big question. It's been free. It cost them I think around, what, $0.80 per transaction. They haven't charged. Now they unveil a different format where you're going to pay 20 bucks a month. But what do you get in exchange for that? Everyone will not have to pay, only those who want this ChatGPT+.

DAN HOWLEY: Yeah, so what it is it's going to be basically faster in responding to your queries. It's going to be essentially an upgraded version of ChatGPT. And you can still use the free version. You can sign up. It's free. It's not a problem at all. And so I think that's something that we're going to continue to see this evolve for some time. But it's not necessarily-- this isn't the end all, be all.