EA's specialty is designing sports matches under its EA Sports label, but FIFA Coins has also shown it can always grow a cellular sports company. Tap Sports Baseball has been a hit for the company, growing from about $4 million of bookings in 2014 to over $90 million in 2019.
A deep pipeline of new games.The development pipeline at Glu Mobile looks really promising. It's new titles set to start soon, including Harness Sports Fishing, Deer Hunter World, along with an upgraded version of Harness Sports Baseball for your 2021 season. EA intends to deliver Tap Baseball to new nations with its licensing expertise from EA Sports.There can be Table & Flavor, a new lifestyle sport, as well as a variety of hyper-casual games launching from Glu's Crowdstar studio. What is more, Glu Mobile may bring fresh ideas to EA about how to decorate certain titles. The business reported seeing positive early results from this initiative on the last earnings call.
Growth at an unbiased price.It's worth checking the cost that a company is paying when it declares a major acquisition. As Warren Buffett has said,"Price is what you pay, value is what you get." Around three hot valuation metrics, Glu Mobile looks like a fantastic value in the video game industry.EA is paying $12.50 per share in cash to Glu Mobile shareholders, which places the latter's price-to-free money flow multiple at 47.
On a forwards price-to-earnings foundation, Glu trades at a multiple of 25, which resembles a relatively good deal in comparison to its bigger peer reviewed Zynga, which trades at a greater forward P/E of $28. Glu can be a much better bargain on a price-to-sales foundation with a multiple only under four, while Zynga trades at closer to six times sales, up there with the industry's top gaming stocks.
EA's got money to spare.EA entered calendar 2021 with plenty of money to reinvest or obtain elite studios such as Glu to expand its dominance from the gambling market.The company made $1.9 billion in free cash flow over the last four quarters. That's in addition to the $6.7 billion in cash and buy FIFA Mobile Coins short term investments in the balance sheet at the end of 2020.