No Tuesday, Electronic Arts (NASDAQ: EA) delivered its earnings report, which wasn’t as pleasant as it could have been. Although the company continues to increase its popularity through its video games like “FIFA 21”, “Madden NFL 21” and “Apex Legends”, its earnings for Q1 2021 were not the best. Net revenue declined to 1.35bln USD, comparing to the same period last year, which was at 1.39bln USD. Net income fell quite significantly to 76mln USD from 418mln USD for the same period last year. EA stock has been one of the benefiters of the pandemic, as lockdowns forced people to remain indoors, where they have increased their time playing video games. The current ease of the pandemic-related restrictions and people’s eagerness to finally spend more time outside, may result in a slight decline in demand for EA’s products.
From the technical side, the stock is stuck between two of its tentative lines, a short-term downside one taken from the high of February 2nd, and a medium-term upside one drawn from the low of November 9th. As long as the share price stays in between those two lines, we will remain neutral.
If EA breaks the aforementioned upside line and falls below the 132.48 zone, marked by the low of March 30th, that may spook new buyers from the field temporarily. This could result in a further decline towards the lowest point of March, at 127.30, where a temporary hold-up might occur. That said, if new buyers are still nowhere to be found at that price, this may lead the stock further south, possibly aiming for the 123.22 obstacle, or the 119.78 level, marked by the low of November 24th, 2020.
The RSI continues to move around 50. The MACD, although slightly above zero, is currently flat and remains below its trigger line. Although the overall momentum is still positive, it is weaking slowly, which supports the idea of staying neutral for now.
Alternatively, if the stock pushes through the previously discussed downside line and climbs above the 146.72 barrier, marked by the highest point of April, that would confirm a forthcoming higher high, potentially setting the stage for further advances. EA could travel to its next resistance area between the 150.25 and 151.26 levels, marked by the current highest point of 2021 and the all-time high respectively. If the buyers are still active, they may send the share price further north, overcoming the 151.26 obstacle and placing the stock into the uncharted territory.
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