Core Thesis - The $55 billion buyout of Electronic Arts (EA) by a consortium led by Saudi Arabia's Public Investment Fund (PIF) marks a significant shift in the gaming industry, emphasizing its strategic cultural and geopolitical importance [2][4] Financial Overview - The acquisition represents a roughly 20% premium over EA's recent market capitalization and a 19.6x EBITDA multiple, indicating a valuation well above typical leveraged buyout norms [3] - EA's stock was trading at $202.05 as of September 29th, with trailing and forward P/E ratios of 48.34 and 23.36 respectively [1] Strategic Implications - The deal allows EA to operate with greater creative freedom as a private entity, potentially leading to a strategic restructuring of its game segments [4] - PIF's strategy includes consolidating U.S.-based gaming assets, with U.S. holdings now accounting for $25 billion of PIF's $29.1 billion gaming portfolio [3] Market Context - The transaction is expected to close in fiscal Q1 2027 and is the second-largest in video game history, reflecting the industry's evolution into a strategic asset [2][4] - Previous bearish perspectives on EA highlighted structural challenges and declining engagement in key franchises, yet the stock has appreciated approximately 73.34% since earlier coverage [5]
Electronic Arts Inc. (EA): A Bear Case Theory
Yahoo Finance·2025-10-22 00:13