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If You Invested $1000 in Electronic Arts a Decade Ago, This is How Much It'd Be Worth Now

Zacks Equity Research
·3-min read

For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in Electronic Arts (EA) ten years ago? It may not have been easy to hold on to EA for all that time, but if you did, how much would your investment be worth today?

Electronic Arts' Business In-Depth

With that in mind, let's take a look at Electronic Arts' main business drivers.

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Headquartered in Redwood City, CA, Electronic Arts is a leading developer, marketer, publisher and distributor of interactive games (video game software and content).

Electronic Arts, popularly known as EA, distributes its gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals — Origin and Play4Free.

EA games can be played on video consoles, personal computers, mobile devices, tablets and electronic readers. The company generates revenues from the sale of disk-based video game products (known as packaged goods), downloadable contents (DLCs), subscription, micro-transactions and advertising.

EA generated revenues of $5.62 billion in fiscal 2021, of which live services and other revenues contributed 74% and the remaining were generated from packaged goods and full game downloads.

Net bookings for fiscal 2021 was $6.19 billion, up 15% year over year, and over $600 million above original expectations.

EA delivered 13 new games in fiscal year 2021, and welcomed more than 42 million new players to its network of more than 500 million unique accounts.

The company operates in three divisions — EA Studios, Maxis and EA Mobile. EA Studios includes DICE (Sweden), EA Canada (Canada), Tiburon (the United States), BioWare (Canada and the United States) and Visceral (the United States).

EA faces substantial competition from console and personal computer game publishers and diversified media companies that include Sony, Microsoft, Nintendo, Activision Blizzard, Take-Two Interactive and Ubisoft. In the mobile and social gaming market, the company competes with Zynga.

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Electronic Arts ten years ago, you're probably feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in October 2011 would be worth $5,789.59, or a gain of 478.96%, as of October 20, 2021, and this return excludes dividends but includes price increases.

The S&P 500 rose 273.56% and the price of gold increased 4.87% over the same time frame in comparison.

Going forward, analysts are expecting more upside for EA.

EA’s digital and live services revenues are expected to gain from portfolio strength on the back of franchises including Apex Legends, FIFA, Madden NFL and Star Wars. EA SPORTS titles and Battlefield are some of its biggest franchises driving active player base. Moreover, EA has a strong slate of game releases for the rest of fiscal 2022 that are likely to boost its top-line growth. The availability of EA SPORTS Madden NFL 22 and Lost in Random besides the upcoming launch of EA SPORTS FIFA 22 is expected to be a key growth driver. EA continues to benefit from spike in demand for video games due to coronavirus-induced social distancing norms. Shares have outperformed the industry year to date. However, intensifying competition from Activision and Take-Two Interactive is a significant headwind.

The stock is up 7.88% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 3 higher, for fiscal 2021. The consensus estimate has moved up as well.
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Zacks Investment Research