Will Shares of Electronic Arts Benefit from a New CEO?
With shares of Electronic Arts (NYSE:EA) trading around $26, is EA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.
T = Trends for a Stock’s Movement
Electronic Arts develops, markets, publishes, and distributes game software content and services that can be played by consumers on a variety of video game machines and electronic devices. Its offers video game products through gaming consoles such as the Sony Playstation 3, Microsoft Xbox 360, and Nintendo Wii. Electronic Arts’s products can also be used on personal computers, mobile devices, tablets, electronic readers, and social networking sites that include popular platforms like PCs, Apple Mac, Apple iPhone, Google Android, Apple iPad, Amazon Kindle, and Facebook.
Electronic Arts has chosen head of EA Sports Andrew Wilson to replace John Riccitiello as CEO. The company has struggled as traditional video games lose market share to cheap gaming apps made for mobile devices. EA has cut costs and released new titles in an attempt to stay relevant but has still struggled, along with the rest of the gaming industry. According to a report from The Wall Street Journal, Wilson was chosen because he has been with Electronic Arts for 13 years and has admirable creativity and business skills.
T = Technicals on the Stock Chart Are Strong
Electronic Arts stock been exploding over the past several years. The stock is currently trading near prices not seen for almost five years. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Electronic Arts is trading above its rising key averages, which signals neutral to bullish price action in the near term.