By Dan Gallagher

The world's biggest sport is now a big problem for Electronic Arts.

Shares in the videogame publisher slid 17% Thursday, on course for the biggest one-day drop in two decades.

That came EA after warned of a shortfall in annual net bookings, mostly due to problems with its Global Football business. That encompasses the annual soccer franchise once known as "FIFA," as well as the linked Ultimate Team online service.

Soccer had been EA's most reliable moneymaker. The company rebranded the FIFA franchise to "EA Sports FC" in 2023 and saw no initial slippage. But the latest iteration, which launched in September, seems to be another story.

EA said late Wednesday that its soccer franchise suffered a "slowdown as early momentum" in the quarter fizzled out. The company cut its bookings forecast for the fiscal year ending March by up to $650 million.

Separately, EA also cited a disappointing performance for the recent "Dragon Age" sequel that launched in October. But soccer is its largest business by far, averaging 49% of total net bookings over the past five years, according to Visible Alpha.

Hence, Wall Street is worried. At least three analysts downgraded EA, bringing the percentage who have "buy" ratings on the stock to 33%-the lowest in at least five years, according to FactSet.

"Without FC as a main growth engine, we find it difficult to envision a future where EA could sustainably outgrow the industry," wrote Omar Dessouky of BofA Securities.

Likewise, Colin Sebastian of Robert W. Baird said FC's problems were concerning, given its contribution to EA profits and its historic resilience.

Thursday's drop puts EA among the weakest-performing videogaming stocks over the past 12 months. Until its soccer franchise gets back in shape, investors are likely to keep this one on the bench.

This analysis comes from the Journal's Heard on the Street team. Subscribe to their free daily afternoon newsletter here.

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(END) Dow Jones Newswires

January 23, 2025 12:53 ET (17:53 GMT)

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