Buy, Sell, Or Hold EA Stock At $165?

Core Viewpoint - Electronic Arts (EA) has experienced a significant stock price increase of over 25% since early 2022, attributed to revenue growth and share repurchases, despite a general decline in gaming demand [1][2][3]. Financial Performance - EA's revenue rose by 30% from $5.6 billion in fiscal 2021 to$7.3 billion currently, although revenue growth was only 2% in fiscal 2024 due to declining gaming demand [1][3]. - The company's operating margin improved to 20.9% in fiscal 2024 from 18.6% in 2021, indicating enhanced profitability [2]. - EA reported total bookings of $2.1 billion in Q2'25, reflecting a 14$2.15 from $1.46 in the prior-year quarter [3]. Market Position and Valuation - EA's stock is currently priced fairly at an estimated valuation of$165 per share, based on a forward P/E ratio of 21x expected earnings of $7.79 for 2025 [5]. - The company has a solid financial position, with a debt to equity ratio of 4.5$57.2 billion, showing only a modest 1% year-over-year growth, reflecting broader industry challenges [1]. - The average quarterly playtime for gamers has decreased by 26% from 2021 to 2023, contributing to the overall decline in gaming demand [3]. Stock Performance - EA stock has risen 20% this year, slightly underperforming the S&P 500 index, which rose by 25% [4]. - Historical returns for EA stock have been less volatile compared to the S&P 500, with annual returns of -8% in 2021, -7% in 2022, and 13% in 2023 [4].