Electronic Arts CEO: Social Gaming Business Exploding
When looking for a high quality stocks that could potentially generate big multi-year gains, it helps to look for companies that are transforming themselves into something better, Cramer said Wednesday. That’s why he likes video game maker Electronic Arts, which has added social games to its roster.
Two years ago the company bought Playfish, an online gaming play, and acquired another social gaming outfit, PopCap, in July.
The move has paid off. CEO John Riccitiello told Cramer the business is “exploding,” with the company is seeing double digit and sometimes triple digit growth in its social and mobile games business.
Riccitiello said the Electronic Arts is now “aggressively” closing the gap between it and social gaming company Zynga thanks the release of its new Facebook game “The Sims Social.” He said the game is now number two in the social gaming space.
“We’ve roughly tripled our user base over the course of the last three to four months,” he noted.
Riccitiello said he was happy to prove the skeptics who thought the company could not translate its intellectual property to social media wrong.
But aside from social gaming, Electronic Arts is also putting more money into its traditional console games. It plans to release new games this fall, including FIFA, which Riccitiello expects to be "giant blockbuster," and Battlefield 3.
As for those worried about valuation of ERTS, the “Mad Money” host suggested comparing it to Zynga. While Electronic Arts sells for 19 times earnings, Zynga is probably going to be a $20 billion company after it goes public.
“So I think Electronic Arts’ $7.2 billion market cap is just too small given the opportunity,” Cramer said.
To see Riccitiello’s demonstration of “The Sims Social,” watch the video.
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