Is NTDOY Stock Safe?
FOREX INVESTORS BUZZ Nintendo Stock Customers of Nintendo Co., Ltd (OTCMKTS: NTDOY) have a love-hate relationship with the company, which tends to make the stock a little volatile. You can see NTDOY stock spike in one week, and tank in the next. For instance, the Nintendo stock price(USD) was trading at $44.25 two weeks ago—it’s now at $39.87. That’s nearly 10% of the firm’s market cap.
Gone. Vanished. Evaporated. In under one month.
Don’t get me wrong; I’m not saying that Nintendo stock is all downside risk. It isn’t.
Heck, the share price almost doubled in the last year, so clearly volatility isn’t stopping the stock from reaching new heights.
When International Business Machines Corp. (NYSE:IBM) makes a sale, it’s usually to another corporation. The client looks at several options, maps out the next few years, THEN decides to buy IBM’s products.
In other words, corporations are rational and methodical. People are not.
Anyone with the faintest idea of psychology knows that people are fickle. They change their feelings at the drop of a hat. One day they love something, the next it’s trash. It doesn’t have the “cool” factor.
New Tailwinds for the Nintendo Stock Price
In March, the “Nintendo Switch” sold 2.74 million units. Consumers were loving it more than analysts were expecting, so NTDOY stock climbed approximately 45% in the three months that followed.
But then the Nintendo stock price hit a brick wall in late June. It tumbled almost 10%.
Chart courtesy of StockCharts.com
I guess the optimism ran dry. But now, the company is releasing Splatoon 2, a video game designed specifically for the Nintendo Switch. It’s an excellent move on their part.
Companies like Nintendo sell their consoles for next to nothing. The Nintendo Switch is barely breaking even at $299.00. They don’t do this from the goodness of their hearts, though.
They do it to sell video games. The margins on video games are ridiculously high, which is great for video game companies and bad for video game fans. Nonetheless, it is how the business works. The REAL money is made from video games, not consoles.
By releasing Splatoon 2, Nintendo is clearly trying to raise its bottom line. From an investor’s perspective, that’s extremely good news. Last year’s gains were founded on top line growth alone.
Can you imagine how much Nintendo stock will rise on both top line and bottom line growth?
To be sure, we’re making the assumption that people will like Nintendo’s games. But I think that’s a safe assumption. Do you remember the Pokémon GO craze last summer? When kids were running around in parks staring at their smartphones? And when you asked them what they were doing, they said they were hunting for Pokémon? That was a Nintendo game.