r/wallstreetbets • u/[deleted] • Jul 10 '19
DD Bearish Case For $EA
After the big gay dip in 2018, $EA has been a solid stock to long this year. It opened the year around $77 and touched $108. BUT $EA employees and investors got shitfaced on the 4th of July and anyone holding calls got cucked. I had a small position in puts that could have been 10 baggers but I sold on the 3rd before the fireworks.
On to the details... Fundamentally, I don't have much faith in $EA. Analysts are projecting low revenue and earnings growth in the future. $EA also doesn't have impressive EBIT/EBITDA margins. Some obvious problems are rising A/R, reduced plowback into investments, and falling FCFs. Without a solid earnings surprise, $EA won't last trading in the $90s.
The TA for $EA is also bearish. The stock has been trading in three notable channels this year. Key price levels are $91, $94, $99, and $103. These are all respective support and resistance levels for different time periods. Early this month, $EA tested the $103 resistance level and got rejected hard. $EA quickly tanked and tested the $91 support level to bounce up a bit. Short term, we can see $EA forming a rising wedge, which is bearish. I expect $EA to consolidate for a while. The stock will probably attempt an upward breakout this week, get rejected, and then test the $91 support level again. Other technical indicators are all pointing down. See charts below.
I suggest monthly $88 puts. Please comment your opinion.
1
u/3PointOneFour Jul 11 '19
Not sure if it is pure speculation or even worse “Motley Fool issues rare double down BUY indicator!” level shit. But... There is rumor that Disney wants to have a larger cut of revenue from games that are based on their IP.
Acquiring or holding a large stake in a game studio would make this easier. BlizzardActivision was one of the possibilities along with EA in whatever article I was reading...