Apex Legends Lifts Electronic Arts (EA), But Market Cycles Point Lower

Steve Miller

Electronic Arts (NASDAQ: EA) soared 6% Tuesday morning, after fresh data confirmed the popularity of newly-released video game, Apex Legends.

However the stock is in resistance and its market cycles suggest lower prices in the coming months.

Yesterday Merrill Lynch and Piper Jaffray upgraded Electronic Arts based on their expectations Apex Legends. However, the stock declined on the day. Yet EA later confirmed that Apex had 25 million downloads and 2 million concurrent players in its first week.

Today the stock is trading higher. Merrill has a $110 price target and Piper has a target of only $99. With the earnings of game makers dwindling, it is unclear whether a single game can drive a sustained earnings recovery.

In analyzing the market cycles for EA, we can see the stock is still in the rising phase of its current cycle. However, it is now in resistance.

Further, recent cycles are negatively configured, meaning they ended the cycles lower than where they began. We believe it will fail and test its recent lows around $80 by late-April.

Electronic Arts (EA) Stock Weekly Chart

ea electronic arts stock research investing outlook bearish february march year 2019

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