Major video game publishing firm Electronic Arts Inc. (NASDAQ: EA), known for franchises including FIFA and Battlefield, drew headlines in late September when it announced it would be acquired in an all-cash deal worth a whopping $55 billion. The investor consortium acquiring the company, which includes Silver Lake, Affinity Partners, and the Saudi government's sovereign wealth fund, plans to take EA private. Meanwhile, investors face key questions: how should they respond to the recent news from EA before the acquisition is finalized? What does this development suggest for the wider video game industry, a giant that, despite recent slower growth and tempered consumer spending, still has a global valuation of nearly $500 billion?
In the short term, continuing to hold shares of EA may be the optimal move for most prior investors, as the company's stock spiked following the acquisition announcement. Shares are trading up 19% in the last month but have plateaued so far in October. For investors, the greater opportunity may actually lie in alternatives like Take-Two Interactive Software Inc. (NASDAQ: TTWO) and Roblox Corp. (NYSE: RBLX), although some caution is warranted as the video game industry shifts.
