This is a step-by-step stock review to answer the question, is Electronic Arts (EA) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Electronic Arts (EA) stock a good buy?
- Electronic Arts Company History
- MOS
- Meaning
- Moat
- Management
- 4M Score
- Is Electronic Arts (EA) stock a good buy?
1. Electronic Arts Company History
- Founded in 1982: Electronic Arts (EA) was established by Trip Hawkins, becoming a major player in the video game industry.
- Headquarters: Based in Redwood City, California, EA has grown into a global entertainment leader.
- Early Success: The company initially focused on publishing games for personal computers, gaining acclaim with titles like “M.U.L.E.” and “Pinball Construction Set.”
- Expansion: EA expanded its portfolio by acquiring several successful game studios, including BioWare and DICE, broadening its reach in the gaming market.
- Iconic Franchises: Known for blockbuster franchises like “The Sims,” “FIFA,” and “Battlefield,” EA has consistently delivered popular and influential games.
- Innovative Milestones: EA pioneered the use of sports simulation games and continues to lead with advancements in gaming technology and online play.
- Publicly Traded: EA is listed on the NASDAQ under the ticker symbol EA, reflecting its strong financial performance and influence in the gaming industry.
- Community and Growth: EA focuses on engaging with its global community and expanding its offerings through digital services and new gaming experiences.
2. MOS (Margin Of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: Watch
- Score: 61
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Electronic Arts makes money:
- Game Sales: Electronic Arts (EA) makes money from selling video games across various platforms, including consoles, PCs, and mobile devices.
- In-Game Purchases: They earn revenue from in-game purchases, such as virtual currency, special items, and expansion packs in popular games.
- Subscription Services: EA generates income through subscription services like EA Play, which offers access to a library of games and exclusive benefits.
- Advertising: The company earns from in-game advertising and promotional partnerships within its games.
- Licensing Fees: EA collects licensing fees from sports leagues and other organizations to use their brands and trademarks in games like FIFA and Madden NFL.
- Digital Downloads: They profit from digital downloads of games and content, bypassing physical media and reaching a global audience.
- Royalties and Collaborations: EA receives royalties from game development partnerships and collaborations with other studios and creators.
- BioWare
- DICE
- Respawn Entertainment
- Codemasters
- Playdemic
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Electronic Arts stacks up against other companies.
- Gravity Co., Ltd.(GRVY)
- NetEase, Inc.(NTES) – 83
- DoubleDown Interactive Co., Ltd.(DDI) – 72
- Electronic Arts Inc.(EA) – 61
- Golden Matrix Group, Inc.(GMGI) – 56
- Playtika Holding Corp.(PLTK) – 56
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Led EA to Record Revenue: Under Andrew Wilson’s leadership, Electronic Arts achieved record revenue, surpassing $5 billion annually.
- Expansion of Popular Franchises: Wilson oversaw the growth and success of major franchises like “FIFA,” “Madden NFL,” and “The Sims,” enhancing their global reach and profitability.
- Acquisition of Key Studios: He led the acquisition of prominent game studios, including Respawn Entertainment and Codemasters, expanding EA’s portfolio and market influence.
- Growth of Digital and Subscription Services: Wilson expanded EA’s digital services, including the launch and growth of EA Play, a successful subscription service offering access to a library of games.
- Emphasis on Innovation: He championed innovations in gaming technology, including advancements in sports simulation and the integration of new gaming platforms.
- Strategic Partnerships: Wilson secured strategic partnerships and licensing deals, such as with the Premier League for “FIFA,” boosting EA’s market position and revenue.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Electronic Arts (EA) is 73/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Electronic Arts (EA) stock a good buy?
Some of the top questions investors can have is Electronic Arts (EA) stock a good buy or should I buy Electronic Arts (EA) stock?
Electronic Arts (EA) is an attractive investment with several notable strengths. As a leading developer and publisher in the video game industry, EA boasts a strong portfolio of popular franchises like “FIFA,” “Madden NFL,” and “The Sims.” The company generates significant revenue through game sales, in-game purchases, and subscription services like EA Play. EA’s successful acquisition of key studios, such as Respawn Entertainment and Codemasters, further bolsters its market position and product offerings.
Despite these strengths, there are some risks to consider. The video game industry is highly competitive, with constant innovation and evolving consumer preferences. EA’s financial performance is also subject to the success of its game releases and the effectiveness of its monetization strategies. Additionally, the company faces scrutiny over issues such as in-game purchases and microtransactions. While Electronic Arts offers strong growth potential and a solid track record, investors should be mindful of the competitive landscape and potential market fluctuations.