How will Apex Legends stock (which is under the umbrella of $EA) perform? Lets find out. Electronic Arts Inc. (EA) is one of the world’s biggest publishers of games. The company, founded in 1982 by Apple employee Trip Hawkins, has published several famous titles such as FIFA, Battlefield, Need for Speed, Madden NFL, and most recently Apex Legends.
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The San Mateo, California-based company benefitted from the sharp surge in the gaming industry last year. Mainly driven by the pandemic. The Covid-19 outbreak forced many governments around the world to impose lockdowns to limit the spread of the virus. Therefore, stuck-at-home gamers started spending more time playing games. Many purchased new game consoles to spend quality time with their friends. The trend had a positive impact on overall sales of videogames.
Apex Legends stock EA raised its revenue outlook last summer amid strong demand for its games. So why are we calling EA the Apex Legends stock?
Because its popular first-person hero shooter game Apex made a notable contribution to the company’s revenue in 2020.
How Apex Legends Is Performing for EA
EA released Apex Legends for PlayStation, Xbox, and Microsoft Windows in February 2019. The goal was to attract new players and capitalize on the popularity of the battle royal format.
Which allows dozens of online gamers to battle each other. The company signed up more than 25 million players for the game within a week after its launch. Apex Legends is free to play. However, players can spend money on in-game items and other subscriptions. Which has been driving revenue for the company.
The title competes with Epic Games‘ extremely popular game Fortnite; which generates billions in revenue by selling virtual items to players. Apex legends stock is strong.
Financial Report
EA announced in its previous quarterly financial report that Apex Legends is on track to become the next $1 billion franchise in its lineup. It’s expected to achieve the milestone by March 2021.
Thus proving that the game is becoming a key growth catalyst for the company. Moreover, EA is also working on a mobile version of the game to capitalize on the massive mobile user base.
The company’s CFO Blake Jorgensen said in a statement last year that, “Apex will have gone from zero to about a billion dollars in lifetime net books in just two years. With this velocity and the addition of mobile, we believe Apex has the potential to grow to a billion dollars in net bookings every year.”
Knowing that, Apex legends stock should be on our radar. Buy the rumor and sell the news. And hopefully we get a little of that growth in our brokerage accounts.
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Major Developments
EA last month announced that it is buying U.K-based game studio Codemasters in a transaction valued at $1.2 billion. Previously, rival Take-Two Interactive (TTWO) was about to buy Codemasters for nearly $1 billion.
EA won the deal by offering more money at the last minute. The transaction is expected to close by the end of the first quarter.
Codemasters is a video game developer and publisher that’s been operating since the 1980s. Making it one of the oldest gaming companies.
They’ve developed several famous titles; with a focus on racing games. EA’s Need for Speed franchise was also very famous. However, the company hasn’t paid attention to racing games in recent years.
The acquisition will add Codemasters’ several famous titles to its portfolio; including Dirt Rally and Formula One. Moreover, EA will be able to market those games using its massive distribution resources including EA Play and subscription services.
Speaking on the acquisition, EA CEO Andrew Wilson said in a statement, “We believe there is a deeply compelling opportunity in bringing together Codemasters and Electronic Arts to create amazing and innovative new racing games for fans.”
Is Apex Legends Still Popular?
EA reported better than expected financial results in its previous quarterly report. The company posted earnings of $185 million, or 63 cents per share for the second quarter, as compared to $854 million, or $2.89 per share in the comparable period of 2019. Its Q2 profit easily surpassed analysts’ average estimate of 35 cents per share. So yes, Apex legends stock is still quite popular.
Financial Performance and Outlook For Apex Legends Stock ($EA)
Revenue for the quarter came in at $1.15 billion, slightly down from $1.35 billion in the year-ago quarter, but above consensus forecast of $958.9 million.
EA also offered its financial guidance for the current quarter. It expects to report earnings of around 61 cents per share on revenue of around $1.68 billion for the third quarter. Analysts on average had forecasted a profit of $1.21 per share on revenue of $2.36 billion.
The results and forecast show that EA wasn’t able to fully capitalize on the booming gaming industry last year. The apparent reason behind the weak third-quarter forecast is the diversified gaming market.
Which is fragmented between mobile devices, PCs, and consoles. Thousands of games from different publishers hit the market every year.
Many of them increasingly become popular within no time. EA’s all-time famous games were overshadowed by popular titles like Fortnite.
Meanwhile, it has become easier for smaller developers to create a game with the potential to become famous and compete with titles from well-established rivals. Today, every app has the potential to reach millions of users in a short span of time; particularly across mobile devices.
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Legacy Games
EA still depends on its legacy games, such as FIFA and Madden, to drive revenue. Nevertheless, Apex Legends stock has performed well over the last year.
EA share price has increased about 30 percent over the past year. The 52-week range of the stock is $85.69-$147.36, while its market cap stands at $40.794 billion.
Meanwhile, most analysts have been recommending investors to “Buy” the stock. The consensus price target estimate for EA stock is $150 per share, with a high price target estimate of $167 per share. And a low-price target estimate of $124 per share.
On the bright side, EA announced in its previous quarterly report that its network has 330 million unique users; with many more joining the platform with every passing day.
Moreover, Apex Legends is also doing great in Asia. The title has achieved massive success in just about two years after its launch. In short, things are looking good for EA and the company is expected to do well in the coming quarters.
