What Happened?
Shares of video game publisher Electronic Arts (NASDAQ: EA) jumped 13.4% in the afternoon session after reports surfaced that the company was nearing a deal to go private.
According to The Wall Street Journal, the deal could value the videogame maker at as much as $50 billion. The report, citing people familiar with the matter, noted that a group including private-equity firm Silver Lake and Saudi Arabia's Public Investment Fund was involved. This potential valuation was significantly higher than the company's market capitalization of $43 billion at the time. Following the news, shares immediately surged and reached an all-time high.
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What Is The Market Telling Us
Electronic Arts’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for Electronic Arts and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 18.8% as the company reported disappointing preliminary Q3 2025 results, revealing sluggish growth.
EA expected a mid-single-digit decline in live services bookings, a stark reversal from its earlier forecast of mid-single-digit growth. Net revenue was also expected to clock in at $1.883 billion, closer to the lower end of its previous guidance range of approximately $1.875 billion to $2.025 billion.
The slowdown was attributed to weaker-than-expected performance in Global Football (football-related video games) and underwhelming engagement from titles like Dragon Age.
Following the update, BMO downgraded the stock's rating, citing diminished visibility. The firm stated, "Despite the increasing strategic market value of Interactive Entertainment assets, we are downgrading EA to Market Perform and reducing estimates and Target Price to $145."
Bank of America followed suit, downgrading the stock to Neutral, expressing doubts about EA's ability to defend its market share.
Electronic Arts is up 31.8% since the beginning of the year, and at $192.36 per share, has set a new 52-week high. Investors who bought $1,000 worth of Electronic Arts’s shares 5 years ago would now be looking at an investment worth $1,454.
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