$33.04
$106.72
bear $33.04
base $63.20
bull $106.72
margin of safety $30.00
market price* $209.70
Electronic Arts makes the EA SPORTS franchises (EA SPORTS FC, Madden NFL, College Football), Battlefield, Apex Legends and The Sims. Live services - mainly extra content in the Ultimate Team modes - were 71% of fiscal 2026 net revenue, and 60% of net revenue came from outside the United States. In fiscal 2026 (year ended March 2026) net bookings rose 9% to $8,026 million, driven by the Battlefield 6 launch and the football franchise. Operating cash flow was $2,553 million, but net income fell to $887 million from $1,121 million and operating income fell to $1,162 million from $1,520 million, partly because marketing spending rose $166 million, largely for the Battlefield 6 launch. A pending agreement to take the company private for $210 per share in cash has shareholder approval and awaits remaining regulatory clearances. Our figures describe the business itself, not that transaction. The merger agreement also allows for a termination fee of up to $1 billion payable by the company in specified circumstances; we have not charged it to any case. HOW WE MEASURE EARNINGS. We start from operating cash flow and remove the swings in working capital, then deduct stock compensation in full and the capital spending needed just to stand still. Working capital matters a great deal here: customers pay for online-enabled games before the company recognizes the revenue, so deferred revenue adds or drains cash depending on the release calendar. Fiscal 2026 included a $533 million deferred-revenue inflow and fiscal 2021 a $581 million inflow; we strip these out. Stock compensation has grown from $196 million (fiscal 2017) to $656 million (fiscal 2026) and absorbs a large share of operating cash flow, so we charge all of it. Only a small amount of capital spending is growth-related (revenue growth was modest), so nearly all capex is treated as maintenance. We then add back cash interest (about $53 million) to see what the business earns before its lenders. Acquired intangibles have only $195 million left on the balance sheet, so adding back non-cash charges does not materially flatter results, although write-downs of past acquisitions (charges including impairments were $486 million in fiscal 2022 and $536 million in fiscal 2023, against $323 million in fiscal 2026) are a reason the downside case is cautious. The ten-year cash flow reconciles to reported figures in every year. Fiscal 2017 operating cash flow was restated upward in a later filing and we use the restated figure. On this basis, business cash flow before interest ranged from $793 million (fiscal 2021) to $1,620 million (fiscal 2024) over the last ten years. The measure has not grown: the median of the first five years (fiscal 2017-2021) was $1,171 million and of the last five (fiscal 2022-2026) was $1,022 million, even though revenue grew from $4.8 billion to $7.5 billion, because stock compensation and other costs absorbed the increase. We use the fiscal 2022-2026 median of $1,022 million as the earnings level. That window starts after the Codemasters (February 2021) and Glu Mobile (April 2021) acquisitions reshaped the business, and it covers a thin release year (fiscal 2023), a strong year (fiscal 2024) and ordinary years. Fiscal 2026 itself came in at $1,022 million, 19.6% below fiscal 2025's $1,271 million (per-share owner earnings fell 16.8%, to $3.83 from $4.60). Our base case starts year one flat at $1,022 million (0% growth, better than the trailing 19.6% decline) for dated reasons: fiscal 2026 carried the launch-year marketing build for Battlefield 6 (released October 2025), and in the quarter ended June 30, 2026 net revenue was $1,986 million versus $1,671 million, operating income $513 million versus $271 million and net income $397 million versus $201 million. One quarter does not move our earnings level, so we hold it flat. Operating cash flow in that quarter was negative $242 million versus positive $17 million a year earlier, and we could not fully reconcile the size of the swing from the filing data available. Our previous estimate was prepared on a different basis, so its figures are not comparable with these. WHAT THE COMPANY OWES. The company has $1,500 million of senior notes: $750 million at 1.85% due February 15, 2031 and $750 million at 2.95% due February 15, 2051. Because these carry fixed rates far below what new borrowing would cost, they are worth less than face value to us: about $1,079 million. Cash and short-term investments were $2,980 million at March 31, 2026; we treat $1,500 million as needed to run a business whose cash swings seasonally, leaving $1,480 million of excess. Net, the company holds about $401 million more cash than debt, or about $1.58 per share on 253 million diluted shares. No debt matures before 2031 and every case covers its interest bill many times over. BEAR CASE: $33.04 per share. Business worth $7,957 million ($31.45 per share); owes $1,079 million against $1,480 million of excess cash, so shareholders also hold about $401 million of net cash; total $8,358 million. The story: the company is hit-driven and concentrated. Its filing says a significant portion of revenue comes from a few popular titles, that Ultimate Team content (a substantial portion from FC Ultimate Team) is material, and that events hurting the EA SPORTS FC franchise are a key risk. Its own record shows business cash flow as low as $793 million and $849 million in fiscal 2021 and 2022, and operating income fell 24% in fiscal 2026 even as revenue rose. We assume a run of weak release slates and weaker football engagement that takes business cash flow to $850 million, $700 million and then $600 million a year from year three (24% below the worst year in the ten-year record), staying there through year ten and then shrinking 4% a year. No growth is credited. BASE CASE: $63.20 per share. Business worth $15,590 million ($61.62 per share); net cash $401 million; total $15,991 million. Business cash flow stays flat at $1,022 million for ten years, then declines 1% a year. We credit no growth: the cash measure has not grown in ten years, and revenue growth, new titles and a Battlefield 6 follow-through are not contracted or proven to reach owners after stock compensation. What keeps the cash flowing is a set of annually released sports franchises and live services that the company has run for many years; each sustained $100 million change in annual cash flow is worth about $6 per share in this case. BULL CASE: $106.72 per share. Business worth $26,600 million ($105.14 per share); net cash $401 million; total $27,001 million. The company's own levers execute: business cash flow starts at $1,300 million (fiscal 2025 was $1,271 million, and the quarter ended June 30, 2026 showed revenue up 19%) and grows 3% a year from year two, reaching about $1,696 million in year ten, then holds flat. Revenue grew about 5% a year across fiscal 2017-2026 and net bookings grew 9% in fiscal 2026, so 3% is below the demonstrated pace. WHAT WOULD MAKE US WRONG. If the true sustainable earnings level is closer to the fiscal 2021-2022 trough (about $800 million), the base case would be worth roughly $50 per share. If stock compensation keeps rising faster than cash flow, as it has for ten years, our flat assumption is too generous. If Battlefield 6 and the June 2026 quarter prove to be the start of a higher run rate, the bull case becomes more likely. HOW WE SET THE MARGIN-OF-SAFETY PRICE. We are moderately sure of the earnings level: ten years of filings show a business whose cash flow has stayed within $793 million to $1,620 million, but the sequence depends on hits. The worst plausible outcomes include a failure of the football franchise or regulatory limits on Ultimate Team spending; neither is modeled directly beyond the bear case. The structure would survive either: debt is small relative to cash, and no notes mature before 2031. Being wrong on the earnings level, on the pace of stock compensation, or on how long franchises last would move the base value to roughly $50 or below. The price assumes a holding period of about four years; the company declares a $0.19 quarterly dividend ($0.76 a year) and has historically repurchased shares (diluted shares fell from 314 million to 253 million over ten years). The margin-of-safety price is $30.00 per share: from that price the bear case implies a value slightly above the price, and if the base case simply holds, a value of about $63 plus roughly $3 of dividends over four years implies about 22% a year, above the 20% target.