Electronic Arts Inc. (EA): A Bear Case Theory

We came across a bearish thesis on Electronic Arts Inc. on Superjoost Playlist’s Substack by SuperJoost. In this article, we will summarize the bulls’ thesis on EA. Electronic Arts Inc.'s share was trading at $202.05 as of September 29th. EA’s trailing and forward P/E were 48.34 and 23.36 respectively according to Yahoo Finance.

The announced $55 billion buyout of Electronic Arts (EA) by a consortium led by Saudi Arabia’s Public Investment Fund (PIF) has surprised markets due to both its scale and speed. Discussions between EA and private equity stalled in August, but JP Morgan’s involvement confirmed the deal’s seriousness. Under the agreement, EA will go private at $210 per share, with PIF rolling over its existing 10% stake, and CEO Andrew Wilson remaining in place. The transaction, expected to close in fiscal Q1 2027, marks the second-largest in video game history and signals the industry’s evolution from entertainment into a strategic cultural and geopolitical asset, as sovereign wealth and private equity target influence alongside financial returns.

Financially, the $55 billion valuation represents a roughly 20% premium over EA’s recent market capitalization and a 19.6x EBITDA multiple, well above typical leveraged buyout norms given the company’s mature, sports-heavy portfolio and modest near-term growth prospects of 5–7% annually. Much of the premium reflects PIF’s broader strategy of consolidating U.S.-based gaming assets, including Scopely, Niantic, Take-Two, and now EA, aiming to create a cultural and economic hub aligned with Saudi Vision 2030. U.S. holdings now account for $25 billion of PIF’s $29.1 billion gaming portfolio, highlighting a clear geographic and strategic focus.

The deal will likely allow EA to operate with greater creative freedom as a private company, insulated from public-market pressures, while facilitating strategic restructuring, including potential division between sports and other game segments. Regulatory scrutiny is expected, including CFIUS review, but political support suggests approval is likely. Overall, the acquisition positions EA as a cornerstone of PIF’s gaming ambitions, combining financial returns, cultural influence, and strategic soft power, while underscoring the increasing geopolitical significance of the interactive entertainment industry.

Previously we covered a bearish thesis on Electronic Arts Inc. (EA) by SuperJoost in January 2025, which highlighted structural challenges, declining engagement in EA Sports FC, underperformance of Dragon Age, and lowered revenue guidance. The company's stock price has appreciated approximately by 73.34% since our coverage. The thesis still stands as EA faces long-term industry challenges, while SuperJoost shares a similar bearish perspective in the September 2025 thesis, now emphasizing risks amid the $55 billion PIF-led buyout and privatization.

Electronic Arts Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held EA at the end of the second quarter which was 43 in the previous quarter. While we acknowledge the potential of EA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.