Electronic Arts gains 3%, headed for longest win streak since 2015

May 24, 2022 2:16 PM ETElectronic Arts Inc. (EA)ATVI, TTWO, MSFT, CMCSA, DIS, AAPL, AMZNBy: Jason Aycock, SA News Editor4 Comments

E3 Gaming Conference Begins In Los Angeles

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Electronic Arts stock (NASDAQ:EA) is 2.9% higher today while the rest of the market is in full-on defensive mode, with most major S&P 500 stocks sharply lower.

The gain means EA stock is headed for a tenth straight winning trading session - which would mark its longest winning streak in seven years, Bloomberg notes. The stock last closed lower on May 10, just after it reported improved profitability in its fourth quarter.

Since then it's up 23%, and the reason is clear: Following the earnings report, people are talking again about EA getting bought.

The videogame sector has seen a couple of major trends in the two years since the pandemic. One is the outsize effects of a large-scale move to stay-at-home entertainment that came alongside widespread shelter-in-place orders in 2020.

Another is a wave of consolidation among game companies for scale. The big three game publishers by now have all made moves to bolt in major mobile revenue streams - Activision Blizzard (ATVI) with King Digital years ago; and more recently EA acquiring Glu Mobile and Playdemic; and Take-Two (TTWO) acquiring Zynga (ZNGA).

Meanwhile Microsoft (MSFT) pulled the trigger on a near-$69 billion pursuit of Activision (ATVI), launching speculation about who might be good acquisition partners for Take-Two or EA themselves.

That chatter is heavy on EA this week after Friday's report that Comcast's (CMCSA) Brian Roberts considered spinning off NBCUniversal into a merger with EA. It's led analysts to bring up old lines of conversation about whether Disney (DIS), Apple (AAPL) or Amazon.com (AMZN) could be the best deep-pocketed buyers of EA.

Adding to the stock's positivity, Apptopia says Electronic Arts has marked this week's top gain in in-app purchases.

In March, Seeking Alpha contributor NJ Value Investor had a base case price of $160/share, suggesting EA had a "wide moat" and looked oversold after a year of underperforming the S&P 500. More recently, contributor Stone Fox Capital reacted to earnings by noting an attractive price but looking for the next dip to buy the stock.

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