Should you sell your Electronic Arts stock?

Roth Capital Markets analyst Eric Handler downgraded Electronic Arts (Electronic Arts Stock Quote, Chart, News, Analysts, Financials NASDAQ:EA) to “Neutral” from “Buy” and raised his 12-month target price to US$210.00 from US$185.00, citing limited upside following a US$55-billion take-private offer.

Handler said the US$210-per-share cash buyout, led by Saudi Arabia’s Public Investment Fund (PIF) alongside Silver Lake and Jared Kushner’s Affinity Partners, leaves only about 4% upside for the stock, making a continued Buy rating unjustified.

“Although there is a 45-day window shop provision, we do not expect a bidding war will occur. Also, we do not foresee any government regulatory review problems,” he said in his Oct. 2 report.

Electronic Arts, based in Redwood City, California, is a leading global video game developer and publisher.

EA announced on Sept. 29 that it had reached the US$55-billion deal to go private with the investor consortium. The transaction, expected to close by June 2026 pending shareholder and regulatory approvals, will be funded through US$20-billion in loans from JPMorgan Chase and US$36-billion in equity. If completed, it would be the largest leveraged buyout in history, surpassing the US$32-billion TXU Energy buyout in 2007.

Handler noted that the US$210 per share offer represents valuation multiples of roughly 25× and 23× consensus FY26 (US$8.29) and FY27 (US$9.17) earnings, respectively, compared with EA’s unaffected Sept. 25 valuation of 20.3× and 18.4×. He called the offer “a fair takeout valuation,” though he sees potential upside to earnings if Battlefield 6 and subsequent live-service offerings outperform forecasts.

Under the agreement, the consortium will acquire 100% of EA’s shares, with PIF rolling over its existing 9.9% stake. Closing is anticipated in the first quarter of EA’s fiscal 2027 (April–June 2026), subject to regulatory reviews, including U.S. and foreign investment approvals.

Handler said competing bids are unlikely given the transaction size, offer price, and the limited pool of potential acquirers. While large tech or media companies such as Apple, Amazon or Disney could theoretically afford to bid, he said, “a strategic move further into gaming appears unlikely.” Take-Two Interactive has been mentioned in the past, but likely lacks the financial capacity for a deal of this scale.

The agreement includes a US$540-million break fee if EA accepts a superior offer during the 45-day go-shop period and terminates the deal within 75 days. Otherwise, EA would owe US$1-billion; the buyers would pay the same amount if the deal falls through on their end.

The acquisition would make Saudi Arabia’s PIF the largest equity owner of EA, with Savvy Games, its video game development arm, expected to oversee the business. Over the past two years, Savvy has expanded aggressively, acquiring Scopely for US$2.9-billion in 2023 and Niantic Games for US$3.5-billion in 2025, and building stakes exceeding 6% in Nintendo, Take-Two, Capcom and Nexon.

Handler said further gaming investments by Saudi Arabia are likely.

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