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EA stock plummets as markets reassess Riccitiello departure

8.34% of share price lost despite brief after hours rally

EA's stock lost nearly ten per cent of its value in trading on the NASDAQ yesterday, dropping 8.34 per cent to 17.15 from 18.74.

The drop follows a brief rally in after hours trading on Monday, which was interpreted as a positive reaction to the news of John Riccitiello's departure. Since then, investors seem to have reconsidered the news, alongside a sales warning from the embattled publisher, resulting in the biggest price slide for the company's stock in nineteen months.

However, the drop still leaves EA's stock in a better position than it was at the start of the year, where it opened at 14.5 before climbing steadily to a year to date high of 19.34 on March 14. A year ago today, stocks were roughly at the same point, closing at 17.01 on March 20, 2012.

"We believe the move and the sales warning could be a sign of tougher challenges ahead," commented Needham & Co analyst Sean McGowan. "Mr. Riccitiello's departure comes after a series of setbacks, and underscores the industry's difficult transition to new platforms, business models and genres."

EA has endured a series of high-profile disappointments recently, including below expectation performance for the Medal of Honor and Dead Space franchises and the Star Wars: The Old republic MMO as well as the high-profile problems and public backlash surrounding the server problems and poor reviews which accompanied the launch of SimCity.

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Latest comments (4)

Adam Campbell Producer, Hopster3 years ago
The grass isn't always greener... I gathered the reaction would be more negative than expected. However, I'm sure normal service will resume eventually and investors do have the chance to be wooed by a new CEO so we'll see.
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Darren Stewart Videogame investor 3 years ago
The market is reacting to the revised guidance that EA gave rather than JR's departure. Lots and lots of talk about JR and he's certainly a big character in the industry but if he'd gone and EA had confirmed guidance the stock reaction would have been very different.

I think the headline should have read "EA stock plummets as markets reassess poor guidance".

www.bougafer.com - investing in videogames
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Joshua Rose Executive Producer / Lead Designer, Storm Eagle Studios3 years ago
Most of the game industry stocks were down yesterday.

So unless the entire game industry lives and dies by the existence of Riccitiello's presence in it, I think this headline is misleading and should be changed.
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Darren Stewart Videogame investor 3 years ago
To be fair, EA was down about 8.5% and the rest were down about 2.5% so there is a headline but, as you say, it wasn't about JR leaving it was about the fact that they reduced guidance.

www.bougafer.com - investing in videogames
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