New (and probably dumb) investor here. I bought about 10 shares of EA stock right before the buyout announcement, so I’m currently up around 70%. From what I understand, it could take years for the deal to fully go through, and shareholders are expected to receive about $210 per share once it’s finalized. Right now the stock is hovering around $200–202.
What I’m struggling to understand is the benefit of holding until the deal closes instead of just selling now and reinvesting elsewhere. That extra ~5% from $200 to $210 doesn’t seem that attractive, especially since I could potentially get better returns somewhere else during that time. On top of that, if the deal falls through, the stock price would likely drop hard.
Is there any real reason to hold in this situation, or does it make more sense to just take the gains now?
EA (Electronic Arts) stock, why everyone is not selling now?
byu/Hugh_Mungus94 instocks
Posted by Hugh_Mungus94
5 Comments
“it could take years for the deal to fully go through,”
Would not take years. If there isn’t any antitrust or other issues that would cause the deal not to happen, the deal will close this year and I’ll guess probably within a few mo.
“What I’m struggling to understand is the benefit of holding until the deal closes instead of just selling now and reinvesting elsewhere.”
There are people who own names until the deal closes, some people doing merger arb perhaps. Personally, I sell pretty quickly if something I own is being bought, especially if part of the deal is in stock.
The reason that the stock isn’t priced at the sale price is because folks are selling due to the risks you’ve outlined. If the selling was so frequent that the price dropped to $190 or $170, that “extra 5%” becomes a lot larger, meaning more people will buy. The market is pricing the risks you’ve outlined appropriately. Folks who believe the deal is 100% guaranteed are able to get a “risk free” 5% gain. Folks who believe that the risks are too great for 5% — like you — will sell. Everybody wins!
Im not super familiar with the deal. But I googled it, all sources say it should close in June 2026. Which seems reasonable to hold.
I didn’t see anything that says years as you say. But I also didn’t to very thorough research so the info I seen could well be out of date.
deal is expected to close next month. the stock trading near the acquistion price is the market saying the risk of any opposition to the deal closing is low
It closes June 30th. That’s two months away, not years away.
As an arbitrage play, it should approach the price as the date gets closer