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Omar Venerio
Omar Venerio
Articles (1728) 

Friday Morning Market Highlights

Markets down, shares of Electronic Arts fall on earnings

US Markets

U.S. stocks were in the red on Friday morning. The Dow fell 0.58% to 28,232, the S&P 500 index lost 0.59% to 3,489 and the Nasdaq Composite Index was down 1.07%, to 11,763.

The unemployment rate was at 6.9% in October, down from 7.9% in September according to the Bureau of Labor Statistics. The unemployment rate has declined for six straight months.

Gainers

• News Corporation (NASDAQ:NWS) +9.9%

• Duke Energy (NYSE:DUK) +3.6%

• Uber Technologies (NYSE:UBER) +3.3%

• United Rentals (NYSE:URI) +1.1%

Losers

• Biogen Inc. (NASDAQ:BIIB) -7.5%

• Flowserve Corporation (NYSE:FLS) -3.7%

• Zynga (NASDAQ:ZNGA) -2.6%

Global Markets

The main European stock markets traded in the red. The U.K.'s FTSE 100 gained 0.38%, France's CAC 40 slid 0.33%, Germany's Dax lost 0.48% and Spain's Ibex 35 fell 0.60%.

In Asia, Japan's Nikkei 225 gained 0.91%, India's BSE Sensex advanced 1.34%, Hong Kong's Hang Seng jumped 0.07% and China's Shanghai Composite fell 0.24%.

Electronic Arts releases earnings report

Shares of Electronic Arts Inc. (NASDAQ:EA) fell more than 9% on Friday morning after the company announced financial results for its second quarter of fiscal 2021. It posted a loss of 11 cents per share, beating analyst´s estimates by 3 cents, on revenue of $503 million, which grew 45.7% year-over-year and beat expectations by $49.33 million.

Chief operating officer and chief financial officer Blake Jorgensen had the following to say:

"We delivered a quarter well above our guidance, driven by our live services, particularly Madden and FIFA. This resulted in a new record trailing twelve-month cash flow of $2.04 billion. We are pleased to announce a new share repurchase program and also to initiate a dividend for the first time in EA history … We are on track to deliver strong growth this year and expect continued growth in fiscal 2022 and in the years to come. Apex Legends is on track to become our latest billion-dollar franchise by the end of the fiscal year. All of our studios continue to execute amazingly well and have enabled us to launch an industry-leading eight games since the beginning of the fiscal year, while continuing to deliver live services content and expand onto new platforms."

In the quarter, revenues from the Live Services segment were 75.5% of the revenue share with a boost from the FIFA and Madden franchises and rose 13% compared to the same quarter of 2019. The rest of revenue came from Full Game downloads and packaged goods, a 51% declined year-over-year.

The company launched a new $2.6 billion share repurchase program and its first quarterly dividend of 17 cents per share.

Looking ahead, the company expects revenue for the third to be around $1.675 billion, lower than consensus estimates of $2.35 billion. Further, for fiscal year 2021, the company expects net revenue to be approximately $5.625 billion. It also projects diluted earnings per share to be approximately $3.15 and operating cash flow to be about $1.850 billion.

At the end of June, Joel Greenblatt (Trades, Portfolio) boosted his investment in the stock by 198% to 35,465 shares. Ron Baron (Trades, Portfolio) increased his holding by 20% to 85,169 shares.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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