Big battles have been playing out in countless living rooms and teenagers' bedrooms since November 19. On this day, Electronic Arts (EA) released "Battlefield 2042". The shooter spectacle is one of the most popular video games in the world and at the same time one of the best sellers of the US gaming company. A good seven weeks before this launch, Electronic Arts had already brought "FIFA 22" onto the market. Whether console or PC: Millions of gamers around the globe emulate their idols with the football simulation. They keep EA's cash register ringing with the purchase of the software itself, as well as additional in-game purchases. But even though the game developer has entered the all-important holiday shopping season with two brand-new blockbusters, it is literally sidelined on the stock market.
Already since the summer of 2020, EA stock has been moving in a sideways trend. The NASDAQ stock turned into this corridor after the first phase of the Corona pandemic gave it a strong push. Because of the contact restrictions that came with the virus, many consumers discovered video games as a pastime, giving the already booming gaming industry something of a boom. EA nevertheless failed to make it above horizontal resistance in the USD 150 area. While the upper limit of the aforementioned sideways trend runs here, support has emerged at just under USD 130. This area came under scrutiny shortly after the release of "Battlefield 2042". Many gamers were critical of the new release. In addition to flaws in the graphics, they criticized weaknesses in the game itself - and thus put the EA share under pressure.
With the recent sell-off, the stock has once again failed to break above the 200-day line. If support at USD 130 fails to hold, support in the USD 115/120 area should quickly come onto the tableau. EA's figures were more or less drowned out by the anger surrounding the latest game launch. The Californians had presented a decent interim report at the beginning of November. "This was the strongest second quarter in the history of Electronic Arts," raved CEO Andrew Wilson. Specifically, group sales from July to September increased by 58.6% to USD 1.826 billion compared to the same period last year. EA increased its net profit by the same amount to USD 294 million. And that's not all: Wilson once again raised the forecast for the fiscal year 2022 (as of the end of March). The CEO describes the new releases for the Christmas business, above all "Battlefield 2042", as growth drivers. Despite all the optimism and growing sales, EA is likely to fall well short of the peak values of fiscal year 2021 in terms of profit.
Even if the gaming stock continues to struggle, attractive returns are possible with the two new softcallable barrier reverse convertibles. Leonteq is offering the popular structure based on the US security in two different currencies. In CHF, the new issue comes with a guaranteed coupon payment of 8% p.a.. In USD, the quarterly payout is 100 basis points p.a. higher. Barriers are uniformly set at 69% of the initial level. This means EA could even fall back into the double-digit price range a bit without jeopardizing the outlined return opportunities. However, if a threshold breach occurs, the partial protection would expire and investors would be exposed to the full risk of the underlying. Please note: Due to the soft callable feature an early termination and redemption of this issue may occur.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.
