Electronic Arts’ Pullback is Actually a Buying Opportunity


 
 
05:36 09/15/2018

The pullback in Electronic Arts EA  is a buying opportunity.

In recent months, the stock fell after the company delayed the release of Battlefield V to November 20, 2018. Then. It lowered its full-year guidance on the delay. While part of that lowered guidance was because of the game’s delayed launch, EA said $115 million of the change was because of revised expectations regarding foreign-exchange rates, according to The Wall Street Journal.

It’s why the stock plunged from $135 to $110 in recent weeks.

But again, it’s an overreaction that appears fully price into the stock.



Technically, it appears to be a disaster with no shot at a comeback. But look closer. The stock is now at double bottom support, and it’s sitting at its lower Bollinger Band (2,20). In addition, RSI is back to a November 2017 low. MACD is historically stretched.

And Williams’ %R is back below its 80-line.

From here, we could see a bearish gap refill around $125.

The other reason the stock could bounce is because the delay is not really a bad thing. It will actually allow the company to release the game after two other hot releases. Take Two’s TTWO  Read Dead 2 is expected late October 2018, and is already expected to be a monster seller. In mid-October, Activision Blizzard ATVI  is releasing Call of Duty: Black Ops 4, which is another big release.

So, by releasing its game in November, it gives the company breathing room.

Then again, EA isn’t dependent on a single game at all. It’s oversold and ready to move. Plus, we’re heading into the holiday season again.

Believe it or not, the holidays are only three months away. Didn’t the year just start?


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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