Why Electronic Arts Shares Jumped

The video game maker's stock soared on an upgrade and strong December sales. Here's what you need to know:

Jan 17, 2014 at 7:25PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Electronic Arts (NASDAQ:EA) were heading to the next level today, finishing up 12% after an analyst upgrade and a strong December sales report.

So what: CRT Capital initiated a buy rating on EA, saying it was particularly enthused about the March release of "Titanfall," as well as the company's popular FIFA soccer games as the World Cup in Brazil is set for this summer. Analyst Neil Doshi explained the move, saying, "Video game stocks trade on game slates." Shares also got a boost as the NPD Group said that EA sales increased 40% in December despite an overall decline in the industry, as three of its games were among the top 10 sellers.

Now what: Both items are certainly promising for the video game maker, but Doshi's observation that industry stocks move on game slates can work both ways. Video games are trendy, and while the company has a handful of strong franchises, including Madden and FIFA, consumer tastes often shift. Despite endorsement of EA, Doshi added that the stock is "not for the faint of heart," a point worth remembering. 

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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