Earnings from EA and Take-Two spook investors.
6 Feb, 2019FORTUNE.COM
Electronic Arts and Take-Two Interactive Software saw their stock prices nosedive Wednesday morning after the publishers reported disappointing earnings and sounded cautions on the future.
EA, maker of the Madden and Battlefield franchises, as well as all recent Star Wars games, was down 15% as of 10:25 a.m. ET. The company missed its revenue projections in its fiscal third quarter, citing “intense competition” as one of the primary reasons. EA also cut its guidance for the current quarter.
“We made some calculated decisions that did not work as planned in Q3, and we did not execute well in other areas of our business,” said CEO Andrew Wilson in a call with analysts. “Against the backdrop of a very competitive quarter, the combination of those factors led to our underperformance. While we are disappointed with the results, we understand where our challenges are, and we are deeply focused on applying the strengths of our company to address them going forward.”
Take-Two, maker of the Grand Theft Auto franchise and Red Dead Redemption 2 (last year’s bestselling game), fell far short on its earnings and indicated it will not pursue titles in the rapidly expanding free-to-play category (such as Fortnite), sticking instead to its focus on AAA games. Shares fell more than 13% in early trading.
“I’m not worried at all about someone else establishing a free-to-play approach,” said Strauss Zelneck, CEO of Take-Two on an earnings call.
The volatility at EA and Take-Two bled over to other publishers as well. Activision shares were down 9% Wednesday morning. Nintendo was down 6%. And Ubisoft shares slid more than 10%.