I bought 300 shares of Nintendo (NTDOY) yesterday at $29.96. While I said I would like to buy Nintendo stock closer to $20, I changed my mind mainly because I don’t think the stock will go anywhere near that low and I hope the many planned software and hardware releases will drive the stock to new highs. If the stock goes lower from here, I may buy another 200 to 300 shares around $25.
1/17/2017 Update: I bought another 200 shares today at a price of $26.00 per share. I now own a total of $500 shares.
The Real Reason I Bought Nintendo Stock
The overriding reason I bought the stock is that it looks like Nintendo is finally acknowledging that their intellectual properties (Mario, Zelda, Donkey Kong, etc.) hold tremendous value and they can tap into that value by releasing mobile games. When legendary Nintendo game designer and producer Shigeru Miayamoto walked out onto the Apple stage two months ago, that signaled in my mind that the company was going to start embracing their mobile potential for real. At least they are leaning in that direction.
I know the company will continue to make game systems, but it is this possibility that they will start making games aimed at the hundreds of millions of mobile devices that truly gets me excited.
Super Mario Run for Android and IOS will be released on 12/15/2016 and it will be their first mobile game that has one of their top franchise characters. There was Pokemon Go (and we all saw the tremendous hype around that one), but Nintendo didn’t actually make that game and didn’t profit too much from it. Super Mario Run though, priced at $9.99, is all Nintendo (along with partner DeNA) and I think it will be a blockbuster hit. Fans have been clamoring for Nintendo games on mobile phones for years and they are finally going to get one. Two more games, Animal Crossing and Fire Emblem, are supposedly being made by DeNA but their release dates are unknown at this time.
Nintendo games, franchises, and characters are loved the world over and I think they could be a powerhouse on mobile devises. I’m hoping Super Mario Run will convince the company to really start expanding into mobile and that is the main reason I am buying the stock.
Other Reasons I’m Buying The Stock
The new game system Nintendo Switch is scheduled to be released in March 2017 and early rumors say that it will sell for $249 and $299. It will be a compact game system that allows users to play on their televisions and then take the game mobile when they need to leave the house. You can see Nintendo’s video here and that page will probably contain more information as we get closer to release date.
Nintendo’s The Legend Of Zelda: Breath Of The Wild is one of the most anticipated games ever and will be released sometime next year for the Switch and Wii U. Unfortunately, it looks like Zelda won’t be ready in time to be released with the Switch and that is certainly a negative. But the game was the big winner, hype wise, at this years E3 and it should still be a massive hit. Just how many game systems it will help sell is unknown of course but we should be hearing a lot about the Switch and Zelda next year.
Another hit that Nintendo has on its hands is the new retro NES Classic Addition console. This sells for $60 and comes with 30 pre-installed games from the past. Unfortunately, supplies are limited and people are having trouble getting these before Christmas. The rumors say that it is such a big hit that they could sell as many as they can make so there will be opportunity lost there. Nintendo probably isn’t making much on this game system but it is certainly getting the company name into customers minds once again.
Nintendo is also getting into theme parks with the news that they will have attractions at Universal Studios Japan, Universal Orlando Resort and Universal Studios Hollywood. I don’t know how much of a money maker these will be but they serve as great advertising at the least and help cement the fun aspect of the Nintendo franchise characters into the minds of kids young and old.
So, my thinking is that the tailwinds will be solidly behind Nintendo for the next 6 months to a year and although the stock is expensive (P/E = 75) and pays almost no dividend, it might be a good time to buy and hope for continued good news. This probably won’t be a long term holding for me like many of the other stocks I have bought, but we will see.
It does worry me a bit that the company might not be able to execute on their target delivery dates and no one knows wether the Switch will be a hit (the Wii U before it was a big dud) but those some of the risks inherent in buying stocks.