Check out the latest Electronic Arts earnings call transcript.

What happened

The maker of The Sims and FIFA 19 enjoyed tremendous momentum in the first half of 2018. Investors loved Electronic Arts' (NASDAQ:EA) finish in fiscal 2018 (which ended in March last year) that showed digital revenue soaring 17% over the previous year, driven by strong engagement in the company's flagship sports franchises Madden NFL 18 and FIFA 18.  

However, the company's momentum came to a screeching halt in August when management announced it would be delaying the highly anticipated release of Battlefield V. The delay meant the company had to push back some revenue from calendar 2018 into 2019. The news seemed to give investors a good reason to sell the stock, which had climbed 461% from the end of 2013 through July 2018. 

A family sitting on the floor playing video games.

Image source: Getty Images.

Moreover, the company's release of FIFA 19 in September didn't generate the digital revenue that management was looking for. Plus, EA has had trouble growing its mobile game revenue lately, which made up 18% of total revenue on a trailing-12-month basis. All of these factors contributed to the shares' underperformance last year.

So what

Throughout 2018, there were questions about whether megapopular battle royale games were taking players away from the major game companies like EA and Activision Blizzard (NASDAQ:ATVI). EA's soft outlook for the holiday quarter played into the narrative that its games are underperforming relative to the more popular games in the industry, such as Epic Games' Fortnite.

After hitting an all-time high of $151.26 last summer, EA shares finished 2018 down 24.9%, according to data provided by S&P Global Market Intelligence. For perspective, the S&P 500 index lost 6.35% in value in 2018. 

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Now what

For fiscal 2019, management is calling for total revenue of $5.15 billion, representing flat year-over-year growth. This is due to the one-month delay of Battlefield V, which will push some of that game's revenue into 2019, as well as the reduced expectations for in-game spending in sports titles. Analysts expect the company to report adjusted earnings per share of $4.57, which would be higher than fiscal 2018's adjusted EPS of $4.42. 

EA has an upcoming release called Anthem in the fiscal fourth quarter -- one of the most anticipated games of the year. The game maker is also working on other projects for long-term growth, including a cloud-based gaming subscription service

In the coming quarters, the most crucial thing for investors to watch is in-game engagement and digital revenue growth. Improved performance in those metrics will likely cause the stock to rebound. Investors will get their first look when EA reports fiscal third-quarter results on Feb. 5.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.