Nintendo Co: Stock of the Week

Key Takeaways for Nintendo Stock

- Nintendo's new game title Super Mario Bros Wonder is another success for the console gaming giant.

- The company's strategy is to leverage characters beyond gaming platforms.

- While the stock is fairly valued, the wide-moat company is worth keeping an eye on. 

Japan’s Nintendo has had another success in console game. Its latest title Super Mario Bros Wonder sold over 4.3 million copies within the first two weeks, and has now officially become the fastest-selling Super Mario title.

Whether or not you’re a fan of the iconic Mario franchise, Nintendo’s stock is one that you might want to keep an eye on.

The company’s recent strong financial performance is evidence that Nintendo’s strategy to leverage its characters beyond gaming platforms is a success. A prime example of this is the Super Mario Bros movie, which raked in a staggering US$1.3 billion at the box office.

While the direct financial impact was not significant, the movie helped attract more new users to Nintendo’s ecosystem. This could boost console and game shipments. Our analyst Kazunori Ito expects Nintendo to be on track to exceed their game shipment guidance for this year.

All these strategies ultimately revolve around its strong intellectual property, which underpins its wide economic moat rating. 

 Nintendo Co Bulls Say

- The value of Nintendo’s popular characters has not been damaged, and they will help to expand the user base.

- The turnover of the game console business will succeed, as Nintendo will deliver its new hardware at an affordable price point with a greater volume of attractive software.

- Nintendo currently focuses on delivering a fun gaming experience through its IP, and no longer restricts its content to its original platform.

 Nintendo Co Bears Say

- While its characters are popular, most of Nintendo’s earnings are still constrained by its own hardware shipments.

- People could be satisfied with Nintendo games provided on smartphones, and might decide not to purchase its hardware.

- Tough competition in the game industry will force Nintendo to cut the price of hardware, which may continue to damage its profitability.