Although shares of gaming giant Electronic Arts (NASDAQ:EA) are in the black this year, EA stock unfortunately remains a disappointment. During the second half of last year, the equity tumbled a devastatingly painful 45%.
Year-to-date, Electronic Arts stock is up nearly 21%. Without that prior loss, most investors would take encouragement from such a performance. But in context, EA has much to go to regain credibility. Moreover, shares have largely been flat since earlier this March.
Naturally, it’s easy to consider giving up on EA stock. For all the talk about video gaming being a robust and growing market, the underlying company has failed to capitalize. Plus, competing names like Take-Two Interactive Software (NASDAQ:TTWO) or mobile-gaming specialist Zynga (NASDAQ:ZNGA) have vastly outperformed Electronic Arts stock over the last several months.
Despite the ugliness, I believe that EA stock is finally starting to look interesting. Thanks to its licensing deal with Disney (NYSE:DIS), Electronic Arts is the exclusive game maker for the Star Wars franchise. This time, management has likely learned the lessons from its past missteps and is finally ready to deliver the goods.
Called “Star Wars Jedi: Fallen Order,” the game has the potential to catalyze strong, if not record-breaking sales. Now, I’m no video game expert: I merely play a few sessions when I have a spare moment. But from the “Fallen Order” official trailer, I’m impressed. Capturing the look and feel of a Star Wars movie, I can imagine it immersing gamers into its fantasy world.
And although it’s too early to make a serious prognosis, I’ve noticed significant improvements in how EA is handling its valuable franchise, auguring well for EA stock.
Getting Star Wars Right Is a Boon for EA Stock
While gaming companies like EA and rival Activision Blizzard (NASDAQ:ATVI) have increasingly focused their attention on esports, there’s still room for single-player centric titles. But until just now, Electronic Arts didn’t truly understand this message.
For example, the company blundered badly with its first Star Wars release since Disney bought out Lucasfilm. In the original “Star Wars: Battlefront,” critics blasted the title for predictable, boring gameplay. What also hurt this game was the lack of a single-player campaign mode.
Why is this important? Because Star Wars is the king of science fiction. The people who were interested in “Battlefront” weren’t just gamers; they were also fans of the engrossing narrative behind the Star Wars universe. To just put up a lazy multi-player game filled with Star Wars characters was an insult.
It also detracted from the longer-term argument of Electronic Arts stock. After all, that Disney license isn’t cheap.
In response, Electronic Arts integrated a campaign mode into the sequel, “Star Wars: Battlefront II.” But critics again blasted the company. Like the original, gaming experts felt that the gameplay was still boring. Even worse, they perceived the campaign mode as lacking real substance, almost as if developers put the story line into the game merely to quiet prior complaints.
Fortunately for those long EA stock, it looks like the gaming firm finally got the message. As I mentioned earlier, the “Fallen Order” trailer is akin to a legitimate Star Wars spinoff film. Speaking as a fan, I’m positive that millions would turn out for “Fallen Order” if it were a movie.
As for the game play, it’s narrative driven ala “Assassin’s Creed.” Theoretically, that means developers spent more time on enjoyability rather than cramming disparate Star Wars elements into one platform.
Electronic Arts Benefits from Timing
With all the excitement surrounding “Fallen Order,” we can’t forget the biggest tailwind of them all: timing.
On Dec. 20, 2019, Disney will release the highly anticipated “Star Wars: The Rise of Skywalker.” As an extension of the original canon, this film is sure to break all kinds of box office records. Indeed, it could break them all.
The producers of the prior film, “Star Wars: The Last Jedi,” did an excellent job of leaving many details unanswered. Eager to finally learn important plot points – who are Rey’s parents, for instance – fans will stampede the box office.
This overwhelming sentiment doesn’t directly impact EA stock. However, the Star Wars franchise is a veritable cash-printing machine. No matter how much critics pan Disney’s capitalistic opportunism, the consumers can’t get enough.
Logically, this should translate to extremely robust sales of “Fallen Order.” Therefore, if you don’t mind tacking on some risk, I wouldn’t give up on Electronic Arts stock. It’s starting to get very interesting in this space.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
