By George Glover

Investors showed Electronic Arts stock a red card on Thursday after the videogame maker warned of slowing demand for its soccer-related titles.

Shares in the "Madden NFL" publisher plummeted 15% to $121.10, making EA the biggest S&P 500 loser ahead of the opening bell. Futures tracking the benchmark index slipped 0.1%.

The selloff came after EA said in an 8-K form filed after Wednesday's close that it expected bookings to fall to $2.22 billion for the three months ended Dec. 31, well below previous guidance of between $2.4 billion and $2.55 billion. The company is set to report full earnings for the fiscal third quarter on Feb. 4.

EA pointed to weakness in its Global Football Division, which includes the EA Sports FC soccer videogames. It also flagged disappointing sales of new title Dragon Age: The Veilguard, which it said had engaged just 1.5 million players over the December quarter -- about 50% below the company's expectations.

CEO Andrew Wilson acknowledged that both titles had "underperformed," adding that EA had responded by delivering a "comprehensive gameplay refresh" earlier this month.

Wall Street wasn't impressed. At least three analysts downgraded the stock to Hold from Buy after EA filed its preliminary results on Wednesday, according to data from FactSet.

Clay Griffin, who covers EA for the telecommunications, media and technology research house MoffettNathanson, said in a note on Thursday that the underperformance of "EA Sports FC" should be a major worry for the publisher because the series' live game mode Ultimate Team "has been the heart of EA's entire business for more than a decade." Ultimate Team allows players to build their own all-star lineup by buying and selling virtual trading cards.

"If Ultimate Team is stagnant, it puts enormous pressure on EA to fill the void. And that's tough (see: Dragon Age)," Griffin, who rates the stock a Hold with a $139 price target, wrote. He added that the company could struggle for momentum given the market's attention will likely be focused on the launch of the new Nintendo Switch 2 console and the release of Grand Theft Auto VI , which is published by rival Take-Two Interactive Software.

Write to George Glover at george.glover@dowjones.com

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January 23, 2025 08:09 ET (13:09 GMT)

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