- Caught up in a storm of bad news and a selloff in the communication services sector, Electronic Arts’ stock has underperformed the S&P 500 by 16.2% over the last 12.
- The company is now trading at the bottom end of its range over the last 10 years. We believe, at current prices, the stock represents a compelling opportunity.
- Investors seem to have overreacted to concerns around Chinese video game regulation and the release of one of EA’s major titles, Battlefield 2042.
- EA is a great Compounder with a strong economic moat, which should drive above-average returns for investors over time.
- Our base case is a $160 stock, up ~30% from current prices. Long-term, we see potential for a 200+ stock in 2025, which would be upside of 75%. We believe $110 or down ~10.5% is the stock’s downside.
For further details see:
Electronic Arts: This Wide Moat Business Looks Oversold