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Electronic Arts Inc. (ERTS) Message Board

  • starofsonytony starofsonytony Feb 18, 2011 12:42 AM Flag

    i cant believe this. i am in shock. i coded games in assembly language for 20 years.

    CityVille and FarmVille-maker Zynga is raising $500 million at a $10 billion valuation, Kara Swisher reports.
    The money is from big investors T. Rowe Price, Fidelity and Morgan Stanley.
    Maybe you're mutual fund-stuffed 401(k) just got some Zynga exposure.
    Zynga makes all its money selling virtual goods to Facebook addicted to Zynga's games.
    Tiny amounts of money make the games progress faster.
    It's a model that works, obviously. Zynga revenues should reach $1 billion, sources tell Kara.
    For context, consider that NASDAQ-traded Electronic Art's market cap is around $6 billion.

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    • ERTS does $1.0bn in sales a quarter

      i.e. either Zynga is massively overvalued already,

      OR Electronic Arts is a screaming obvious deep-value buy

      they're turning the ship and trimming the sails

      trades at 1/2 the valuation (EV/Revenue) vs. Activision, I'd say easy trade

      • 1 Reply to overrated_author
      • Sorry, but TTWO is the better "buy" at this time. Put aside your "strong buy" sentiment for ERTS for a little while and check out these facts...

        ERTS forward P/E ratio = 22.42
        TTWO forward P/E ratio = 15.65

        There are net sells in insider purchases for ERTS vs. net buys in insider purchases for TTWO (more than 1.5 million shares purchased in the last 6 months). ERTS insiders are dumping the stock with impunity lately. Check out the insider transactions for ERTS in 2011. Sell, sell, sell... Ouch. This selling trend for ERTS is even apparent in 2009 and 2010. Why won't ERTS insiders buy or hold on to the stock if it is such a "screaming obvious deep-value buy" as you call it?

        Finally, TTWO has Carl Icahn as a beneficial owner. Always bet with the rich. ALWAYS.

        So, in summary, TTWO is a better investment than ERTS right now. Even the insiders in the two companies appear to agree with me on that statement.

        All of the information that I posted above can easily be found on Yahoo! Finance.

        For the record, I don't have any problem with ERTS as a trade play. In fact, I've been in and out of ERTS several times in the past few years for some great profits.

        Enjoy the rest of your weekend!

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