Electronic Arts (NASDAQ:EA) is scheduled to announce its earnings on Tuesday, May 6, 2025. Historically, Electronic Arts stock has had an equal probability of either rising or falling on the day after its earnings announcements. Over the last five years, the stock has shown positive one-day returns in 50% of cases, with a median increase of 2.3%. In contrast, it experienced negative one-day returns in the other 50% of cases, with a median decrease of -4.7%.
For traders focused on events, while the historical information indicates a balanced chance, recognizing these trends could still aid in developing trading strategies, especially when analyzed in conjunction with market anticipations. There are two prevalent approaches:
- Pre-Earnings Positioning: Assess the historical probabilities of positive or negative returns to set up a position before the earnings announcement.
- Post-Earnings Correlation Analysis: Investigate the historical links between the immediate stock reaction to earnings and its later medium-term performance to inform positioning post-announcement.
In anticipation of the forthcoming earnings report, consensus projections indicate earnings per share (EPS) of $0.91 on revenue of $1.55 billion. This marks a year-over-year decline in revenue compared to the previous year, which recorded earnings of $0.67 per share on revenue of $1.67 billion. The expected revenue drop is likely attributed to an ongoing decrease in gaming demand.
From a fundamental standpoint, Electronic Arts currently boasts a market capitalization of $38 billion. Its revenue for the trailing twelve months was $7.3 billion, and the company continues to maintain operational profitability with $1.5 billion in operating profits and a net income of $1.0 billion.
That being said, if you are looking for upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
See earnings reaction history of all stocks
EA Stock Historical Odds Of Positive Post-Earnings Return
Some insights into one-day (1D) post-earnings returns:
- There are 20 earnings data points logged over the last five years, with 10 positive and 10 negative one-day (1D) returns noted. Overall, positive 1D returns occurred about 50% of the time.
- Remarkably, this percentage rises to 58% if we analyze data for the last 3 years instead of 5.
- The median of the 10 positive returns = 2.3%, while the median of the 10 negative returns = -4.7%
Additional information regarding observed 5-Day (5D), and 21-Day (21D) returns post earnings is summarized along with the statistics in the table below.
EA Stock Correlation Between 1D, 5D, and 21D Historical Returns
A comparatively less risky strategy (although not effective if the correlation is low) involves understanding the correlation between short-term and medium-term returns after earnings, identifying a pair with the strongest correlation, and executing the suitable trade. For instance, if 1D and 5D exhibit the highest correlation, a trader can go “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data derived from 5-year and 3-year (more recent) history. Note that the correlation 1D_5D pertains to the relationship between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation of EA Stock With Peer Earnings?
Occasionally, peer performance can impact post-earnings stock reaction. In fact, the pricing could begin prior to the earnings announcements. Here is some historical data on the past post-earnings performance of Electronic Arts stock in relation to the stock performance of peers that reported earnings just before Electronic Arts. For a fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
Preserve & Grow Wealth With Risk-Focused Quality Portfolios
Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (a mix of all 3, the S&P 500, S&P mid-cap, and Russell 2000), resulting in strong returns for investors. Additionally, if you seek upside with a steadier experience than an individual stock like Electronic Arts, consider the High Quality portfolio, which has outperformed the S&P and achieved >91% returns since its inception.