EA trade ideas
Awaiting break from channel in EANASDAQ:EA and indeed the gaming stocks in general have improved lately and we are of opinion that that is set to continue in a bullish manner. The stock of EA has been stuck in a down channel for some time and we hope the next touch on the top of that channel is a breakout to the upside. It is wise to wait for tat break to take a position.
AVERAGE ANALYSTS PRICE TARGET $111
AVERAGE ANALYSTS RECOMMENDATION OVERWEIGHT
P/E RATIO 14
SHORT INTEREST 3.35%
COMPANY PROFILE
EA Short Spread PUTs90/75 Put Spread EXP September 20th
Cost was $4.21 entry and profit target will be the value of the debit.
Max loss will be if it breaks its range at around $100-105
EA has had a poor response to its recent games such as Anthem and it continues to thrive from its sub based market model they aren't overly bad with their products but they aren't captivating gamers. Companies such as CD Projekt Red drive a value based model for their content whereas EA drives a profit per unit model from in-game purchases and expansion packs. Overall I think their earnings will be weak and will slightly damage the sentiment in the stock dropping its rangebound formation into a downtrend.
Bears getting a grip of Electronic Arts again, short below $90 EA had a terrible week and suffered a 10% drop in 2 sessions on high volume which wiped out the gains it had made in the previous 2 weeks. Reaction to the release of Apex Legends was not exactly as expected and clearly signals the change in trend to free games with Ingame purchases, which is very much like the development of the subscription model in software providers.
The implications for gaming stocks like EA and ATVI is quite worrying and makes this a no go zone on the long side.
Potential trade setup is short below $90
Company Description
Electronic Arts , Inc. engages in the provision of digital interactive entertainment. The firm develops and delivers games, content, and online services for Internet-connected consoles, mobile devices, and personal computers. It operates through the North America and International geographical segments. Its product brands include The Sims, Madden NFL , EA SPORTS FIFA, Battlefield, Need for Speed, Dragon Age, and Plants vs. Zombies.
