EA Electronic Arts
Deal price reflects a $55B buyout premium, not EA's flat-growth, mid-teens-margin standalone reality.
The story
EA is now a private company, its $55B take-private by PIF, Silver Lake, and Affinity Partners having closed. Underneath the deal noise, the operating business is a mature sports/live-service publisher (Madden, FIFA-successor EA Sports FC, Apex) with flat revenue (~0.5% 5y CAGR) and margins that just compressed to 16.4% TTM from low-20s, signaling normalized economics rather than a new growth phase.
Drivers unchanged from prior take since the deal's closing doesn't alter standalone cash-flow fundamentals; beta trimmed slightly (1.2->1.15) toward the industry anchor now that leveraged-buyout uncertainty is resolved and capital structure is set by new private owners.
Value drivers
| Revenue growth (Y1) | 5.0% |
| Terminal growth | 2.0% |
| Forecast horizon | 8y |
| Target operating margin | 19.0% |
| Years to target margin | 5 |
| Sales-to-capital | 1.00 |
| Beta | 1.15 |
| Failure probability | 1.0% |
| Cost of capital (WACC) | 9.7% |
| Terminal WACC | 9.0% |
Valuation bridge
| PV of explicit FCFF | 4.88B |
| PV of terminal value | 8.10B |
| Equity value | 14.22B |
| ÷ shares → per share | $56.33 |
News
bullish +0.30 · 8 articles
- Video game giant Electronic Arts closes $55 billion go-private sale of its business
- Jared Kushner and The Saudis Just Bought Madden
- Can Snail's 3 AAA Games Unlock the Next Phase of Growth?
- PIF, Silver Lake, and Jared Kushner's Affinity Partners complete $55 billion EA deal
- Video game maker EA bought by Saudi-led group for $55bn
- How Investors Are Reacting To Electronic Arts (EA) Surging Q1 2026 Earnings And EPS Growth
- Ferguson Stock Jumps 8% on Surprise S&P 500 Entry
- Ferguson Added to S&P 500 and the Plumbing Stock Pops. Where It Can Go Next.
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 7.91B | 5.0% | 16.7% | 995.58M | 376.55M | 619.03M | 564.55M |
| 2 | 8.27B | 4.6% | 17.3% | 1.08B | 361.49M | 714.58M | 594.34M |
| 3 | 8.61B | 4.1% | 17.9% | 1.16B | 342.57M | 814.50M | 617.82M |
| 4 | 8.93B | 3.7% | 18.4% | 1.24B | 319.86M | 917.97M | 635.03M |
| 5 | 9.22B | 3.3% | 19.0% | 1.32B | 293.46M | 1.02B | 646.07M |
| 6 | 9.49B | 2.9% | 19.0% | 1.36B | 263.57M | 1.09B | 628.07M |
| 7 | 9.72B | 2.4% | 19.0% | 1.39B | 230.44M | 1.16B | 607.45M |
| 8 | 9.91B | 2.0% | 19.0% | 1.42B | 194.38M | 1.22B | 584.52M |
Key risks
- New private owners could load debt onto a low-growth cash-flow base, straining coverage if margins don't hold near 19%
- Live-service/sports titles face engagement and monetization ceilings as growth has stalled for 4 years
- Loss of public disclosure reduces investor visibility, but market price now reflects deal terms, not standalone value
Catalysts
- Post-close cost restructuring could push margins back toward the 20-22% range seen two years ago
- New ownership may accelerate mobile/Saudi-market distribution given PIF's regional reach
- Any new franchise hit (Battlefield relaunch, etc.) could reset the flat revenue trajectory