jumped 9% on Monday amid an upcoming announcement with professional basketball, rumors and reports about the broader video-game market and a weak stock chart in recent weeks relative to those of its rivals.
Indeed, the last point may be the most important, analysts say. With EA's stock in the doldrums recently, many investors may have been waiting to see when it would bottom out. With the stock rising today, many likely became buyers out of fear of missing the stock's next move up.
While none of the rumors or reports floating around on Monday should have caused EA's stock to rise, it is "legitimate" for investors to focus on the disparity in recent share performance between EA and its rivals, says Michael Pachter, an analyst with Wedbush Morgan.
"Lots of people see that as a compelling opportunity to buy EA," adds Pachter, whose firm has not done any recent investment banking business for the video game software giant.
EA's stock closed regular trading up $4.50, or 8.4%, to $58 on Monday.
slumped in March after the company
slashed its revenue and earnings outlook. The company's shares
slid further last month when it gave
disappointing guidance for its current fiscal year.
The outlook offered by EA's rivals, such as
, was similarly disappointing. But their stocks have responded differently in recent weeks.
From the end of April through Friday,
Take-Two Interactive Software's
stock rose 21%, Activision's stock 19% and THQ's 8%. In contrast, Electronic Arts' shares have been basically flat. Pachter and other analysts suggest that investors may have been looking for an excuse to buy up EA's stock.
Investors apparently got that excuse on Monday. Over the weekend, GameIndustry.biz, an online trade publication focusing on the video-game business, reported that demand for development kits for
upcoming PlayStation 3 are outstripping supply, a potentially bullish sign for the new device.
Meanwhile, EA and the National Basketball Association said Monday that they will make a joint announcement on Tuesday about an initiative in Europe. Sports games are EA's bread and butter. After fighting a bitter war with Take-Two last year in the sports game genre, the company has moved to sign big deals with the National Football League and
ESPN media property to shore up its sports franchises.
Another rumor circulating had to do with EA potentially upping its stake in rival
from the 20% that it currently owns. Others focused on apparently strong pre-orders for the next iteration of EA's flagship
title and apparently disappointing sales for recent titles from Take-Two and THQ.
There are "lots of rumors but no hard facts yet," says one hedge fund investor who's long the stock. "I just think it is the fear of missing its next run as guys have been waiting to buy lower and now can't."