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EA and other video game stocks see big boost as M&A fever creeps in

Shares are trading ‘in sympathy’ with Microsoft and ABK as the AquiBlizz saga looks set to close
EA and other video game stocks see big boost as M&A fever creeps in

EA was one of a number of video game-related stocks that saw a substantial boost with the denial of the FTC’s request for an injunction on the Activision Blizzard deal.

The FTC, the US’s competition regulator for many video game, media and internet companies, was one of the few bodies to oppose the deal, alongside the CMA. With the move to block their request for an injunction, it seems that a wave of potential acquisition or merger-fever has hit the world of publicly traded video game companies. Especially as their last ditch attempt saw an injunction rejected for a second time, leaving only the UK's CMA blocking the deal.

Benzinga was one of a number of stock observation outlets that noted a 4.6% rise in EA’s stock price after the news, with their stock price now at $137 while Take-Two boasts a price of $150, both higher than the same date in 2022. The sudden rise of interest in video game stocks follows a wave of high-profile acquisitions not just in gaming - with the Microsoft/Activision Blizzard acquisition - but also in mobile, as Sega acquired Rovio and Savvy Games Group acquired Scopely.

M&A fever

While it’s somewhat speculative to conclude that the injunction being rejected is driving a wave of M&A fever, it certainly presents a significant rise of interest in video game stocks. But it also reflects the volatility of larger gaming companies, whereas Rovio - already one of our Top 50 game makers - has been trading steadily since their acquisition by Sega, EA and Take-Two have both had relatively rough times post-Covid. Especially given EA is now moving into uncharted territory as they lose the FIFA licence and move one of their highest profile franchises to being simply EA Sports FC.

Which isn’t to say there hasn’t been similar volatility in mobile - as Playtika only recently saw their stock upgraded from “underperform” to “neutral” by major analysts from the Bank of America. However, with mobile remaining out of the decidedly heated limelight in the Activision Blizzard saga, it reflects a broadly positive trend in how mobile gaming is performing more predictably, yet still positively, which we can also see in the huge success of major titles in the past few years.

A fringe aspect of the Activision Blizzard acquisition saga is arguably that it means nothing is off the table M&A wise. We’ve already seen some major stories close in mobile, as with Sega and Rovio where Playtika had been floated as a potential buyer earlier in the year. With Drake Star’s report earlier in the year suggesting that M&A would see a big comeback seeming more and more prescient, at least on the higher-end of the scale.