Gaming stocks are still stuck in a trading range. Markets are not convinced sales for hot titles will return any time soon. Last week, Electronic Arts (NASDAQ:EA) failed to hold the $102.50 weekly high. And even after the 5.6% drop last week, the stock’s 28 times P/E is high relative to the potential growth ahead.
Investors are trying to weigh the value of Apex Legends entering Season 2. For the last two weeks, EA stock rose ahead of the announcement. And following the classic "sell the news," markets will turn their attention to its earnings report scheduled for August 6, after the market closes. Still, the Apex Legends franchise has the potential to add to revenues. With an older player base compared to the freemium game Fortnite, EA may cash in on a large audience base and a growth in players.
Look for positive reviews and buzz for Apex Legends Season 2. If the game is dramatically better than the last season, EA stock will quickly resume its rally back towards the $100 - $110 range.
Related Stocks
Activision (NASDAQ:ATVI) trades with less volatility but could start moving after its earnings report on August 1 after market close. Take-Two (NASDAQ:TTWO) stock bottomed at below $90 in March. Despite a P/E of 41 times and above EA and ATVI stock, its uptrend is still intact.
Your Takeaway
EA shares held the $90 level for the last three months. The stock has potential upside ahead of the earnings report.
