Only this type of investor should try to play EA stocks

<p>Electronic Arts (NASDAQ: EA) shares have been doing a bit since the news of the original success of their martial arts game, Apex Legends, back in February. At the time, it was trading at about $ 97 per share. Today, the EA stock price is just over $ 101 per pop.

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The company continues to release new games, the success of which may send EA higher. Still, unless one is familiar with this industry far beyond the economy, I only see difficulty in taking advantage of Electronic Arts stocks.

EA bearings Back to their distance-bound paths

EA shares have also shown a long history of delimitation trading. It settled in a range between 2003 and 2008 and again from 2009 to 2012. Yes, EA has risen almost ten times from its lowest levels in 2012. Still, capital first reached $ 100 per share more than two years ago. Since then, it has not seen any net profit.

The economy provides some incentive to break the pattern. Analysts expect earnings to be 7.1% higher this year and 12.3% next year. Even with a future price-to-earnings ratio of around 19.5, EA offers little reason to buy or sell based on measurements. This also makes the distance pattern for EA shares over the past four months understandable.

Only players should play EA shares

But I do not only have a problem with Electronic Arts shares. Its peers, such as Activision Blizzard (NASDAQ: ATVI) and Take-Two Interactive (NASDAQ: TTWO), also worry me. Yes, traders must carefully follow the measurements for EA shares. But predicting its next step means understanding both gaming and the electronic gaming industry in general.

A successful game can change the game (excuse the word) for EA. The company may get another crack at Apex Legends-driven euphoria when it releases Apex Legends enters season 2 in early July. It can also get a boost from new editions of the Madden NFL or FIFA football franchise. My colleague Luke Lango predicts $ 110 per share for Electronic Arts shares if a game edition succeeds.

His prediction could easily prove to be correct. The problem is that $ 110 takes the EA stock price to the top of the newly established range. What EA really needs is the catalyst that will bring it above that level.

In the longer term, Electronic Arts shares also need a driving force that will take it past last year’s record high of $ 151.26 per share.

Traders should know more than just console games

Knowing that means understanding the games. More importantly, the rise of device-based games from companies such as Zynga (NASDAQ: ZNGA) and Glu Mobile (NASDAQ: GLUU) provides more competition from PC or console-based games. In addition, companies such as Tencent (OTCMKTS: TCEHY) show that the industry is facing further threats from China.

I have not owned a game console for several years. In addition, more than a decade has passed since I last played my old favorite, the Madden NFL. Consequently, I no longer have an intuitive understanding of games.

I am also not interested in the EA share price in the middle of its range. Investors who know the games and can quickly assess whether a particular release will resonate with consumers can, however, see opportunities at these levels.

The conclusion of the EA share

EA stock investors need to understand not only financial and stock patterns but also electronic gaming. Like many points in its history, EA has once again established a pattern of distance trading. The shares are now traded in the middle of their range. Therefore, if an exciting event is ruled out, investors have as much to gain as they have to lose right now.

However, an understanding of such events changes the purchase proposal. Investors with more intimate knowledge in the gaming industry have a better understanding of the issues that will reason, both among them and consumers. As a result of knowing the game, a trader is placed in a better position to know when the EA stock can rise.

At the time of writing, Will Healy had no position in any of the above shares. You can follow Will on Twitter at @HealyWriting.