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EA Stock Drops After Visceral Closed and Star Wars Game Delayed

ea stocks drop visceral shut down star wars game delayed

When Electronic Arts (EA) announced on Tuesday that Visceral Games was closing its doors for good, and that the studio's in-development Star Wars project had been delayed and passed on to a different Vancouver-based studio, game lovers were understandably disappointed. But the news has had a ripple effect, inciting the same response in investors who grew concerned when they noticed that EA's stock shares had dropped following the official announcement.

As detailed in a piece published by CNBC, in the day since EA confirmed that the untitled Star Wars game Visceral was working on alongside Uncharted scribe Amy Henning likely wouldn't launch until at least fiscal year 2019, the company's stock dropped almost three percent, dipping down to $112.39 per share at the time of initial publication. (As of 9 p.m. ET Wednesday, it has reportedly bumped back up to $113.16 per share.) Still, that's a slight drop from the 42 percent that EA has risen over the course of 2017 -- a figure that could come as a surprise to some when considering how the company's Mass Effect: Andromeda performed on the financial front.

Despite the stock decline, however, analysts at Atlantic Equities are remaining hopeful about the impending Star Wars title, estimating that it will sell about eight million copies when it finally launches. This prediction makes sense, as it falls in line with previous statements that indicated Visceral's Star Wars game would be "groundbreaking."

Additionally, the analysts wrote that the stock drop is "disappointing" but not a "view changer," citing EA's ability to generate revenue from its existing line-up of games. Though Atlantic Equities predicts that EA's fiscal year 2019 will be cut by two percent as a result of Visceral shuttering and the Star Wars project getting delayed, it projects substantial growth for EA in 2019, particularly with the FIFA World Cup taking place that year. Analysts expect EA to capitalize on the opportunity release a new FIFA game in conjunction with the event.

Looking forward, but not as far ahead as 2019, EA is expected to have a strong holiday season this year. A slew of sports games are already circulating, and the company has Need For Speed Payback and Star Wars: Battlefront II on the horizon in November. The latter title is anticipated to sell millions of copies and keep the Star Wars games franchise on solid ground, which is perhaps needed now more than ever before.

Source: CNBC

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