Electronic Arts

Politics may continue to flavour the headlines, what with the President-elect, still just elect. Indeed, given the flurry of memes suggesting it might need the National Guard to coax a barricaded President Trump out of the West Wing’s attic, there is still some way to go. That said, a market that pivoted from a Blue-Wave-is-good, to a political-gridlock-is-also-good narrative, and smoked a three day-rally into the pipes, is now left looking for new direction. Yesterday, it got it: a vaccine, with promise. Whilst the gaze has been on the bigger picture of late, there continues to be a feast under the hood. On Friday Electronic Arts, the video game developer that owns mega-franchise hits such as FIFA and Madden, reported numbers. Now, given video gaming is an obvious lockdown winner, expectations were high. The whisper was for a beat and raise. The numbers beat, but a typically conservative management shied off a raise. The shares, already slipping off the YTD high as the recovery trade picked up steam, traded heavily, ending the day down 8%. For those who follow the business of video games, the quarterly numbers are noise. They are messy. Releases can get moved, shifted into different quarters, upsetting analyst models. The real story, though, is the direction, the journey. EA is at the nexus of a media revolution, and it’s not just about the FIFA franchise, despite it having the biggest calendar year, ever. It’s about new games. It’s about live services, services that extend and enhance the experience. APEX legends, the free-to-play shoot out, saw net bookings up 24% year-on-year. EA Play, the subscription service now has 6.5m fully paid up subscribers and a new partnership with Microsoft Game Pass. Analysts keen for numbers to plug into models also had a new two-year $2.6bn share buyback to fiddle with. When considering the durable, multi-year trends that will play out irrespective of who wins the White House, or which Senators are returned by the fine state of Georgia, the video game market is one of the brightest. The sands are shifting in media and the flaring of the EA share price in the thick of the election huff-and-puff offers a terrific opportunity for long-term investors to plug-in and play.