Nintendo Stock - NTDOY

One of the oldest game companies in the world who started making card games before the digital revolution currently has stock in the downswing, should you invest? At the time of writing this the stock is currently floating around $35. The ten year high of this stock is around $60 when it was riding the massive launch success of the Nintendo switch. So whats happened and should it bounce back?

Why so low ?

There are a few reasons why the stock is trading around half of its 52W high. Nintendo announced sales predications for the switch but unfortunately a few months before an earnings report they announced that switch sales weren’t where they wanted them at the moment but they were very happy with the sales. Lets keep in mind the switch is currently on pace with the Wii sales at comparable timelines. At the end of the day the system sales were quite close but when you miss projections the stock is usually going to suffer as a result. I believe is because not a lot of the actual financial analysts know much about the current realistic state of video gaming. One thing they do know is that the retro mini consoles sell like……well they sell like the systems they are mimicking. I think a lot of analysts predicted a pattern that for the past two years in late fall Nintendo had released the NES mini and the SNES mini. It came as no surprise that these systems quickly became the hottest thing on the market with scalpers buying stacks at a time and selling them online for upwards of 10x as much. The demand for these systems were just that high. I think it was expected that there would be a successor such as the N64 mini or the gameboy mini, but the time came and went with no announcement. Even if you dont know anything about the pulse of the video game world the nintendo mini systems transcended into the public eye making the news. It sold out, it was cheap to make and it was easy money. Finally the release year of 2018 was somewhat lacklustre from the standard that the Nintendo Switch made for itself after the first year of releases with major entries from Zelda and Mario. In 2018 there was slow leak of releases that ranged from good to great but nothing that could match the excellence of 2017. Yes, at the very end of the year the latest entry in the super smash bros was released and sold tremendously well. In just about a month on the chart it sold over 12 million units which is incredible but unfortunately it was released mid December, which left 11 1/2 months with not much in the way of AAA. I still used my Switch a lot for these smaller titles and also the Switch has solidified itself as an indie game platform. Many developers state their indie titles sell best on the Switch. Some great entries this year that made their way to Switch included Dead Cells, Hollow Knight, Into the Breach, Celeste, Overcooked 2 and many more. I enjoyed playing theses titles immensely but I don’t think its a stretch to say they are not system sellers.

Does the future look powered up ?

I think the rainbow road ahead looks bright for Nintendo. Speaking of rainbow road one of the reasons I think the stock will rebound is Mario Kart iOS is due out at some point this year. Mario Kart 8 Deluxe has sold over 15 million on the Switch and Mario Kart 7 has sold over 18 million on the 3DS and then it also sold 17 copies on the WiiU. Joking aside, this is a franchise that targets both the hardcore and the casual gamer. Those sales are serious numbers especially when you consider you need to own the hardware to play it. Now its not hard to imagine what the potential could be if you offered this game on a device that over 180 million people own and you add in mobile gaming transactions that Nintendo has been testing and fine tuning with mobile releases like Super Mario Run, Pokemon GO and Animal Crossing: Pocket Camp.

2019 is already off to a much better start when it comes to mainline releases. Early January, Nintendo fans were delighted to the release of the port of New Super Mario Bros U Deluxe. Currently other games that are listed on the agenda for Switch for the rest of the year that we know for sure Include new core titles from the animal crossing and the Pokemon series. As well as the newly announced Mario Maker 2 and the ground up remake of 1993 Links awakening. As well as the march release of cute platformer: Yoshis Crafted World and the new entry in the Luigi Mansion series which has yet to garner an exact date. On top of all these strong looking releases, Nintendo has also stated that it hasn’t shown everything for 2019 and they still have many surprises to delight us. One very popular rumour is the Metroid: Prime trilogy on the Switch. What started on the GameCube has now become a cult favorite. Many credible sources were expecting it to be announced at the previous Nintendo Direct but not a mention of Metroid at all. Nonetheless, this rumour still makes a lot of sense seeing as Metroid Prime 4 has basically just been restarted from the ground up. What was first announced as just a title screen at E3 2017 has become the question following every Nintendo Direct. Fans are thirsty for more information regarding anything Metroid. This would be the perfect stop gap to ease the pain while Metroid Prime 4 is restarted and it show some goodwill to the fans.

Nintendo Switch Online launched near the end of 2018 with little to no fanfare. It is required for online play for most games, offers cloud storage and most importantly features back catalog of retro Nintendo classics. The bright side is that the service is quite cheap and only works out to a couple dollars a month. The bad news is that it only features a handful of games and currently only games from the original NES. While its great that we finally have the early makings of the successor to Virtual Console, the sad part is that most of those games aren’t pleasing fans. There are a few great Mario, Zelda and Metroid titles but for the most part the lineup is somewhat forgettable. Nintendo has made it clear that virtual console is dead but that Nintedo Switch Online will take its form somehow and one users data mining revealed some rather fruitful news if it holds water. It was found that at the launch of the service there was no mention in the code for any other consoles other than the original NES, but at some point there has been some code added in that features SNES titles. This is huge news because unlike the original NES games that just are fun for nostalgia sake, the SNES games are still actually fun to play among the test of time. A handful of titles that were discovered among the data include: Super Mario World, Super Metroid, Super Punch Out, Link to the Past, Pilot Wings, F-Zero and Super Mario All Stars just to name a few. This is great news for gamers but also great news for shareholders. The launch version of NSO sounds like it didn’t entice too many gamers they way they were hoping and they are looking for a good enough reason to sign up. I have even heard many people say that the recently released Tetris 99 was something good enough on the service that made them sign up. The SNES games will do just that, it will cause a lot of people who initially passed on NSO to sign up. SNES games are the perfection the 16 Bit era before games went 3D, these games being released on NSO will surely cause a large spike in the subscriptions. At the previous earnings report it was announced that digital sales were up almost 95 percent year on year, so clearly the install base is connected to the system and the digital version of it. We are in the current age of subscriptions because they are passive income and people often forget about them, this would bolster the bottom line for Nintendo.

One last thing is the rumored announcement of the next iteration on the switch itself. Its unclear if that would be a more pro version with better battery, OLED screen and better functionality or if they would take the opposite route and try to offer a more baseline version with some of the features removed. As its currently just a grain of salt right now its possible nothing will happen but new hardware will drive the install base of the switch and generate buzz again for a system coming up on its second birthday. It would bring new fans into the mix and it would also get existing fans to upgrade to the latest and great.

Nintendo has weathered many storms in the past just to always end up in the blue ocean eventually and there is no reason to see them not doing that again. Even though, in my opinion they are doing great they need to keep the momentum moving forward.