All things considered, video game leader Electronic Arts is having a pretty decent year despite inflation concerns, recession fears and other macroeconomic headwinds. EA (EA) shares are only down about 2% in 2022, a drop that is not as bad as the rest of the tech sector, which is now in bearish territory.
Still, there are concerns about EA’s future as the gaming industry consolidates. Microsoft (MSFT) which owns the Xbox is in the process of acquiring Activision Blizzard (ATVI). Grand Theft Auto maker Take-Two Interactive (TTWO) has already signed mobile game developer Zynga.
Will EA be able to remain independent as its peers continue to grow? There’s also growing competition from companies like metaverse mobile game company Roblox and Fortnite maker Epic. Even Netflix (NFLX) threw its hat at the arena of the games.
EA has many profitable franchises such as the long-running Madden NFL games, a popular football series (soon to lose the FIFA brand), Apex Legends, and various games tied to the Star Wars universe. be a good acquisition target for pocket technology and media companies such as Apple (AAPL), Disney (DIS), Comcast (CMCSA) or Amazon (AMZN).
So, will EA finally be bought? The company was not immediately available for comment. However, the brand has been acquisitive in its own right and may be looking for more deals, particularly ones that could bolster its mobile gaming division. EA made two such acquisitions in 2021, Glu for $2.4 billion and Playdemic (previously owned by AT&T (T ) ) for US$ 1.4 billion.
Analysts at Goldman Sachs estimate that there is about a 15% probability that EA itself could be acquired, “given the heightened levels of M&A activity in the video game space,” according to a recent tech industry report. wider. It’s a small chance to be sure, but it’s greater than zero.
Analysts have come up with a potential acquisition valuation of $190 per share, which is “consistent with recent video game transactions“. That’s nearly 50% above EA’s current stock price. Still, EA has enough quality content to justify going it alone for the foreseeable future.
Wells Fargo analyst Brian Fitzgerald noted in a report after EA’s latest earnings were released in May that a “solid pipeline” (more EA Sports games, plus updates to The Sims, Lord of the Rings and Bioware franchises) ) as well as “accelerating growth” were positive for the stock. Therefore, EA may not need to sell itself to a larger company to remain competitive in the video game world.
This article is a translation of the writing by Paul R. La Monica to the website CNN Business.
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