When I started at EA in August, my timing was fortuitous in that I was able to jump into their Employee Stock Purchase Plan right away. Rather typing out what that is, I’ll just quote another website:
“A typical ESPP program lets employees elect to set aside 10% of their salary to purchase shares of stock in their own company. This stock is typically issued at six month intervals. The purchase price per share is typically the market price of the stock less a 15% discount. The market price chosen is either the price at the beginning of the six month interval or the price at the end of the interval, whichever one is most favorable to the employee.”
My first six month offering period is coming up at the end of February. I believe when the interval started, ERTS was trading at almost $50 even. EA released their quarterly earnings report today and the company beat analysts’ expectations. In afterhours trading, ERTS is up just over $3, bring the stock to approx. $53.50.
My question is, what do I do at the end of this offering period? Let’s assume the stock stays above $50, so my purchase price will be $50 less 15%. Do I sell immediately? I’ll reap the benefit of the difference in prices plus the 15%. Or, do I hold onto the stock for a little longer, hoping the price will increase even further, thus further multiplying my gain? If I hold onto it, I run the risk of the stock price dropping and then I’ll be in a loss position.
The safe bet would be to sell immediately and guarantee myself at least a 15% gain (minus dreaded taxes). The intelligent choice would be to analyze EA’s position in the coming months and choose accordingly. I’m dumb when it comes to money, so I’m really weak in that area.
Maybe we can look it briefly… the industry is through the console transition. The 360, PS3, and Wii are all out in the marketplace now. Gamers who were holding their money back to wait for the new systems are now spending. From now on, gamers should be back to their pre-transition buying habits. EA is making games for the PC, 360, PS3, and the Wii. It seems like we have all bases covered and I’m also privy to some titles that haven’t even made public yet.
Unless, I’m missing something, should continue to rise beyond February which means I should hold onto it. Right?
Well, that was a lot of dry money talk. To offset that, here’s a picture of that giant baby (14.5 lbs) that was born in Mexico recently.