EA acquiring Playdemic from WarnerMedia: time to buy?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jun 23, 2021
  • EA is buying Playdemic, the creators of the Golf Clash mobile game.
  • The acquisition is valued at about $1.4 billion and will add to EA’s mobile game offerings.
  • Electronic Arts stock price fell 1.5% Wednesday, creating an exciting opportunity to buy.

Electronic Arts inc. (NASDAQ:EA) is buying Playdemic, the creators of the Golf Clash mobile game, from WarnerMedia. The company sees this as an opportunity to improve its mobile offerings by teaming up with one of the best mobile game creators.

EA shares pulled back 1.5% on Wednesday but are still up nearly 60% since March last year. The stock is down more than 6% since the start of last week. 

Fundamentals overview: EA is potentially undervalued

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Electronic Arts stock looks potentially undervalued based on its forward P/E ratio of 19.84. However, analysts expect earnings to decline by more than 72% this year before bouncing back 10% next year. Therefore, the stock could pull back before establishing a more robust rally. 

The company could experience an average earnings growth of about 15% for the next five years. Therefore, it could be a great long-term buy.

Source – TradingView

Technical overview: buy the rebound

Technically, EA stock has pulled back closer to oversold conditions in the 14-day RSI. The stock also trades just above the 100-day MA.

Investors can target short-term rebounds at $143.83 and $149.09. The key support levels are $134.02 and $128.23.

Bottom line: EA investors can buy the short-term rebound

EA seems poised for a short-term rebound and looks relatively undervalued. However, earnings growth constraints this year could see EA’s share price fall further.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

  1. Etoro, trusted by over 13m users worldwide. Register here >
  2. Capital.com, simple, easy to use and regulated. Register here >