Wii anticipation drives Nintendo stock price to six-year high
by Blake Snow 
{ Sep 5th 2006 at 10:15PM }
Even though Wii has yet to launch (read: unproven), consumer and industry confidence in the console has driven Nintendo's stock price to a six-year high at just over $26. Investment bank Merrill Lynch raised its target share price of Ninty stock from $25 to $29 last Friday citing high anticipation for Wii as the reason for the price hike. If line graphs, volume charts, and share prices bore you, this basically means that Nintendo stock is rising while peeps wait to see if the company can deliver the motion-sensing goods.
In contrast, Sony's stock price took a sharp drop in May [enter Sony E3 press briefing joke here] while Nintendo shares experienced a spike and continued growth ever since.
Reader Comments (Page 1 of 2)
Ichidou @ Sep 5th 2006 10:25PM
Hot diggity dawg!
...well, that's about all I can really think about saying without causing a flame war.
GSI @ Sep 5th 2006 10:28PM
...or how about:
Wiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
hey alex @ Sep 5th 2006 10:31PM
The uptick is also the result of the successful launch of the DS Lite and profitibility of Nintendo, which is 3X more this year than in the year prior. The Wii only adds to Nintendo's value.
H-QB @ Sep 5th 2006 10:30PM
PSSSH, that picture is totally a porn picture of two squiggly lines going at it. LOL
subnet6 @ Sep 5th 2006 10:32PM
"this basically means that Nintendo stock is rising while peeps wait to see if the company can deliver the motion-sensing goods. "
A bit more accurately, stocks don't rise while people "wait" as much as stocks rise because people are NOT waiting. Apparently somebody is buying this stock now in HOPES it will deliver.
If people were "waiting", the price wouldn't be popping up like this.
I understand your point, but your word choice may be confusing for some.
No matter how you look at it, this is good for nintendo and shows growing investor confidence, which doesn't really mean much with regard to the success or failure of the console but it at least tells us how the money is betting, and its betting in nintendos favor, at least right now.
I will be interested to see what happens to the stock after the Sept 14/15 conferences, and if this change (up OR down) has any effect on the Sony stock price. Its all academic at this point, but still interesting to watch it unfold.
Kris @ Sep 5th 2006 10:32PM
duh.
T-Bag @ Sep 5th 2006 10:33PM
"On the backs of fanboys, and fanboys alone."
GSI @ Sep 5th 2006 10:34PM
Hmm...I get paid on Friday...
/debates on if I should buy some stock in Nintendo before the announcement.
vidGuy @ Sep 5th 2006 10:36PM
Was stock price the giant enemy crab Sony was talking about attacking for massive damage?
Ok, it's old and beaten, but it's still fun to say (type, I guess).
GSI @ Sep 5th 2006 10:36PM
-->"On the backs of fanboys, and fanboys alone."
Yea b/c we all know that only "fanboys" buy stock in companies right?
/rolls eyes
God you are ignorant...
T-Bag @ Sep 5th 2006 10:42PM
- GSI,
No sane buyer would jump the gun and buy so much so early without being at least 50% sure it's worth it. Who said fanboys cant buy stock?
GSI @ Sep 5th 2006 10:43PM
"Historical battles" and "giant enemy crab" in the same sentence never gets old.
Props to you for somehow bringing it into a totally unrelated story. LOL
Paul P. @ Sep 5th 2006 10:45PM
It's pretty interesting that up until May their stock performance is very similar.
T-Bag @ Sep 5th 2006 10:47PM
- Paul P,
Thanks for proving my point.
NarmaK @ Sep 5th 2006 10:55PM
I bought 26 share a few weeks before E3.
Made about $200 so far.
I wonder what I should spend it on.
Pete @ Sep 5th 2006 11:59PM
. -->"On the backs of fanboys, and fanboys alone."
I guess this means that all the Wii fan boys and girls can "afford" to purchase stock. Sony fans have to save their pennies for the PS3 and a HDTV and assorted other things. Or maybe they just don't have any money at all.. Hmmmmmmm?
schtum @ Sep 5th 2006 11:06PM
"No sane buyer would jump the gun and buy so much so early"
1. Who says anyone's bought so much? Could be lots of people buying small amounts. Besides, any true fanboy with a portfolio would have bought months if not years ago. Going by this graph, they'd have doubled their investment if they bought late last year.
2. Sane buyers always buy early. It's the idiots who wait until the stock has already peaked. That's when the sane buyers start selling (to the idiots).
Give up. You've never made a single point that stood up to scrutiny. You're just a pathetic anti-fanboy who desperately needs Nintendo to fail so you can feel superior for not liking them.
Josh @ Sep 5th 2006 11:44PM
How does one go about even buying Nintendo stock while living in the US? :X
vidGuy @ Sep 5th 2006 11:31PM
As a student majoring in economics (among numerous other things), I find it amusing that so many people do the exact opposite of what they know to be the best course of action - "buy low, sell high".
Want some solid stock advice? BUY tons of Ford stock. Seriously. They are at the worst economic point in their history. You could get an enormous amount of stock for reasonable amounts of cash. Then, in ten years when Ford is back near the top, you could sell for thousands in profit. Do you really expect FORD to stay near the bottom, or worse, go into bankruptcy?
Instead, the typical know-nothing investor would buy Google, which has already peaked and will only lose money.
The smartest investor would have bought Nintendo stock at or before the announcement of a new console. I haven't checked, but Nintendo stock was probably at a local low point during 2003 and 2004. The optimal time to sell will likely come after the first of the year. If the market looks good, stay in for a few more months. I don't see the hype and media coverage sustaining a market peak for more than 6 months.
An informed investor may shift all of their money from Sony to Nintendo stock. But then again, that would require the investor make assumptions about a market (they aren't used to doing that, not really). Truthfully, tech stocks aren't the best investment, anyway.
Dr.Swiss @ Sep 5th 2006 11:37PM
Wouldn't it be smarter to invest in EB, Walkmart, Toys R Us, etc etc since they carry Nintendo, Mircosoft and Sony? That way no matter who loses the console war you win since they make money on all three?
Dr.Swiss @ Sep 5th 2006 11:38PM
Walkmart = Walmart
GSI @ Sep 6th 2006 12:33AM
-->"BUY tons of Ford stock. Seriously. They are at the worst economic point in their history."
Well the way it's going they aren't going to go anywhere b/c they (and the other American car companies) haven't gotten the message that there is no point in making huge SUVs and trucks.
The Japanese and European car makers have gotten the memo...
idioteraser @ Sep 5th 2006 11:50PM
Nintendo stock has always been stable since they have always made a profit. Sony on the other hand has dropped by half.
Yes I wouldn't buy Ford stock unless I had money to possibly lose. Ford has for years been borrowing money from the US goverment to keep afloat. Detroit automotive industry is dying out. Yes Ford could go out of business or be bought by a Japanese company and just make a few car models each year for a specialized market.
Eggman @ Sep 5th 2006 11:50PM
I don't see this declining in the months ahead either (although sony has a tough 4-5 years ahead of them). Nintendos business model is solid, not only are people excited about their hardware, but the main focus of their console are the games delivered on the hardware. People want the wii not so much for the box, but the games that are coming out for it. This added with the fact that they'll be selling the consoles for a profit anyway, and i have no doubt this trend continues (especially after software software/hardware sales post launch).
Sony on the other hand has to be the exact opposite. Their main focus is on their box and its high tech gizmos. The same box which they will be selling for massive losses. On top of that you have a launch line up (and most games in the few months after launch) of games which are kind of an after thought for not only the company itself but what seems like a majority of its consumer base (i c a lot of emphasis on blu ray, hdmi and all that from the sony fans instead of "OMG! I can't wait to play all these games at launch"). And with sonys only hope in the short term (3-4 years) being huge software sales, the future isn't looking to bright on their side.
Anyway, sonys recent stock decline shouldn't be looked at so much as a disinterest on the consumers part for the ps3. Rather, the decline has to do with the large amounts of loans, and problems manufacturing blu ray, cell and the ps3 which has put a lot of constraints on the company. Sony will most likely continue to decline but just until they can get the ball rolling on all this new tech.
Jonn @ Sep 5th 2006 11:51PM
#10: I was just going to make that joke, having learned seconds ago why OPM and PSM keep making it. Curse you and your 50-minute lead.
#11: We're not trucking in web opinions anymore. This is real money, in the real world. And you said it yourself; "No sane buyer would jump the gun and buy so much so early without being at least 50% sure it's worth it." So the people buying Nintendo stock are either insane(in which case they're probably in public service), or more than 50% sure it's worth it. Or, perchance, they want to buy stock *before* the price inevitably goes up at launch. No, wait, the last two don't match your stance, so you're going to shoot flimsy logic and unsupported claims at them until they go away.
idioteraser @ Sep 5th 2006 11:55PM
Both Blu-ray and HD-DVD are doing terrible saleswise. There are reports of disappointment in the formats. Seems a lot of early blu-ray movies don't look better then dvd movies that have been upscaled. Add in no extra features for the price and a horrible movie selection.
I could see both formats tanking. Sony has gambled on the blu-ray and not decided to trim the fat from the company. Sony could lose a lot of their divisions if the PS3 does not make blu-ray a winner. Videophiles have burned on a lot of formats over the years. I doubt they will pick up ps3s as a cheap blu-ray player like a lot of Sony Defense Force members say.
DVD players in their first months have done far more sales in both hardware and movies then the blu-ray and hd-dvd formats have. I doubt things will get better for blu-ray and hd-dvd formats.
Jonn @ Sep 6th 2006 12:11AM
#25: For Massive Damage!
vidGuy @ Sep 6th 2006 12:46AM
Yes, GSI, but chances are that the company will do something to make itself profitable in the next few years.
That's the point. You shouldn't invest based on something that is already happening. The objective is to act before the market moves to maximizing gain and minimze loss.
You can't go more than a few blocks in any area without seeing an SUV or truck for sale due to gas prices. I'm sure Ford execs see the same thing I do in this regard. They'll change their business model, for sure.
GSI @ Sep 6th 2006 1:05AM
...and they've had how many years now to figure that out?
They must have a pretty pathetic R&D department b/c the Japanese seem to be more efficient with their money when it comes to designing more economic cars.
Darth Pixel @ Sep 6th 2006 1:46AM
Ford's market capitalization is still above 15 billion dollars. Even though its stock has declined a lot, it's nowhere near its historical low, even though their outlook is worse than ever.
LaughingTarget @ Sep 6th 2006 1:22AM
vidGuy -
That is a, how to put it, overly simplified explanation of stock purchase decisions. That is merely a small part of what does down. Simply because a stock is down, even from a historically strong company, doesn't even remotely turn it into a buy.
Ford is not exactly a good buy right now. Just because anecdotal information of you seeing SUVs all over the place doesn't amount to a quality business decision. That should have been in your early economics books. Ford simply hasn't invested in fuel efficient technologies, which are going to be increasingly important as the years go by. Fuel costs are not going to get any cheaper, and with current world affairs, they are on track to rise at a rate that exceeds general inflation and average cost of living increases employers pay. Fuel efficient cars are going to become the norm, something seriously lacking in a company that banks on Mustangs and F-150's to pull them through. Ford only has two fuel efficient vehicles in their entire fleet, one of them is a hybrid, and for a hybrid, the MPG aren't all that hot pulling in a 32 MPG rating.
An example:
PanAm
I really hate dragging this one out all the time, but it is hard when everyone goes off and ignores the example. PanAm was once the biggest and baddest airlines in the world. They were at the top. They had it all. Passengers, profits, no one could touch them. However, it all changed. Fuel prices began to rise and the airline industry was deregulated. They simply were not able to turn the hulking ship around and change their strategy and, today, they simply do not exist, having sold what remaining profitable routes they had to Delta in 1991 and vanished in the wind.
Like PanAm, Ford is in no position to be maneuverable. Their manufacturing plants are not set-up to build the cars that will be in demand in the future. They don't have the technology to build those cars. Ford is a massive company, and massive companies don't have corporate agility. End result, inabililty to respond to change, even if the upper management realizes it.
Investors don't buy stocks because they are cheap. They look at future expected profitability. The Wii, while an enticing factor, is actually remarkably minor in effecting the Nintendo stock prices. It is the success of the DS that is lighting the rocket under the Big N's stock. Investors and potential investors see all those DS units flying off the shelves and they say to themselves, "Hey, Nintendo is going to really be banking for a while, this is a good, solid buy."
It also helps that Nintendo is a dividend paying company and investors are willing to, somewhat, ignore the "buy low, sell high" mantra. High expected profitability results in high dividends per share. Nintendo recently put out $2.51 a share, which is nice and sweet, especially among those with a few thousand shares.
Furthermore, it doesn't help that the whole "buy low, sell high" mentality was popularized by day traders, who were also the same people that got killed in the whole tech sector bust, so listening to them is a major no-no. Timing stock purchases only works if you plan on holding them for the short term, and that tends to be a mistake given that investors will lose out on capital gains benefits and pay full marginal tax on any gains.
Investors want long term profitability and are willing to pay a premium to get it. Nintendo has shown over the years they can make profitable machines, and when they come out with a truely huge blockbuster, like the DS, the investors are willing to pay big bucks to get in on that stable stock price and high dividend action.
Kris @ Sep 6th 2006 1:30AM
I need some of what LaughingTarget is on.. uh Adderall.
joystiq @ Sep 6th 2006 1:42AM
what does sony have to do with the Wii, why is it even mentioned. Why wasn't the redline microsoft has and what does stock from may has to do with current stock? the answers to this question We may never know.
Bill @ Sep 6th 2006 1:38AM
$26 really isn't very much. Pretty funny given the huge profits Nintendo supposedly makes. And wait till inevitably, the DS starts doing worse.
I have a feeling Wii might flop too. It's really, really hard to call. Basically, "I dont know". But there's at least a solid possibility Wii will flop huge. I have noticed as we get closer to launch the PS3 hype seems to be growing while Wii hype seems to be fading a bit. The graphics of Wii are just so bad compared to the other consoles I'm not sure it can overcome them.
Which I really hope so, because I want Nintendo to go out of business. Not really because I hate the company, but their fanboys are too numerous, and I'm tired of the media bias towards them.
Raynre @ Sep 6th 2006 1:57AM
I love my NTDOY stock. ^_^ Made over $600 in the last three years...
Hey... I could buy a PS3 with the money I earned off of Nintendo stock! Oh the sweet sweet irony that would be...
...
Psh, yeah right, Im giving Nintendo's money back and investing it all in a Wii + games. ^_^ Thanks Nintendo for the "free" Wii!
GSI @ Sep 6th 2006 1:58AM
Yet another hilariously stupid and illogical post by Bill...
/bravo!
vidGuy @ Sep 6th 2006 2:01AM
@Laughing Target,
I agree it's simplified, but only for the sake of this discussion. This board isn't here to discuss financial trading strategy.
Yes, investors don't buy stock only because it is cheap. There obviously needs to be intention of growth or the stock wouldn't be profitable. But the average small time investor ALWAYS buys what is hot, which is counter-intuitive to the point of being ridiculous because by the time they get it, it's already climbed to sky rocketing prices.
You bring up some great points. One that made need further investigation, though, is the benefit of dividend. If you look in the medium term, a company's share price often dips roughly the same amount as the dividend paid out. So what paying a dividend really does is converts a portion of the stock's value into cash. It's a false benefit. If an investor held 1000 shares of Nintendo stock before the record date of the $2.51 dividend, they made $2510 in cash, but their stock dropped roughly $2510 in value (I haven't checked Nintendo's stock price, but this is often the case in most markets).
Buying low and selling high works in the long term as well. It's true that it developed as a short term mentality, but if you buy Ford stock now, and in ten years their stock is pulling $65 a share, then you sell as it levels off, you've made a good mound of dough.
The real benefit? You stand to gain much more than you stand to lose when you buy low.
Anyway, I've been writing books worth of material lately about market strategy and economic indicators of the market trend. You seem to know your stuff, so let's not worry about proving it here on a video game blog.
Bill @ Sep 6th 2006 2:26AM
>>Investors don't buy stocks because they are cheap. They look at future expected profitability. The Wii, while an enticing factor, is actually remarkably minor in effecting the Nintendo stock prices. It is the success of the DS that is lighting the rocket under the Big N's stock. Investors and potential investors see all those DS units flying off the shelves and they say to themselves, "Hey, Nintendo is going to really be banking for a while, this is a good, solid buy.">>
Except I wouldn't count on Wii. Eventually soon they're going to tap out the Jap market. They're at 10 million and the PS2 sold 18m in Japan. Somewhere around 20 the market gets saturated. At the rate DS is selling it's not far away. Those lofty DS sales will fall. I kinda suspect this is already happening (before the black DS temp boosted sales last week, the DS sold a recent low of 75k the week prior).
Then we turn to America where they've barely outsold PSP and now NPD is predicting a dropoff in this month's NPD's after two months of decent DS lite sales.
And Wii, as I detailed above, maybe it'll do great, but maybe it'll be a bomb. Like I said the closer we get too launch I start to suspect the latter. That'd really put a hurt on Nintendo if Wii doesn't take off.
GSI @ Sep 6th 2006 2:51AM
Yet ANOTHER hilariously stupid and illogical post by Bill...
/bravo!
Bill @ Sep 6th 2006 2:58AM
Whoops, in case anyone didn't get it I meant to say Nintendo may saturate the Japanese market soon with the DS..not Wii that was a mistake.
Like I said I think it's at 10m now, versus like 18m PS2's in Japan.
vrf @ Sep 6th 2006 3:17AM
Bill,
The success of the DS has been a direct result of the Blue Ocean strategy. With that kind of corporate focus, the potential market is a lot bigger than the 20 million gamers that bought a PS2. 50 million is probably where any kind of "market saturation" discussion can begin.
cringer8 @ Sep 6th 2006 3:20AM
None of this is going to matter in three years.
http://lifeaftertheoilcrash.net/
And don't jump down my throat unless you actually read the *entire* report.
GSI @ Sep 6th 2006 3:31AM
Oi...not another one.
I have a friend who believes in the who Peak Oil "theory" and is damn near convinced it is going to be basically be Mad Max.
cringer8 @ Sep 6th 2006 3:39AM
It already is in the Middle East, GSI.
When Cheney and the CIA are concerned, there's reason to at least read the report. It's just a collection of data and other reports.
GSI @ Sep 6th 2006 3:46AM
/rolls eyes
...and 9/11 was govnerment orchestrated right?
Awol @ Sep 6th 2006 4:12AM
I sent this chart in to Infendo & GoNintendo, and began this whole escapade.
Infendo chose to post it, and wrote a follow-up article, both times mentioning me.
I have yet to see my name on this.
I don't care. As long as I can stick it to the ps-fanboys again and again.
MEGA DAMAGE!@
kite @ Sep 6th 2006 4:11AM
Meh, alternate energy sources enough.
KR @ Sep 6th 2006 8:46AM
Sell now. After Xmas is over, the only place to go is down...especially once the "disappointment" factor shows up.
rocko @ Sep 6th 2006 8:48AM
Remember when Electronic Arts and Jamdat used to be like, 60 bucks!! Now what is it? 30?
John Lucas @ Sep 6th 2006 9:00AM
I need to get me some Nintendo stock.
Wished I got it a few years ago during the N64 & Gamecube days.
Laughing Target is right. Longevity & stability count more than flash-in-the-pan success. Only when greed & impatience become factors do people forget that.
Looking to make quick money. Well if you're agile enough to play that hustle, go ahead, but the word 'invest' literally implies long-haul.
You know as much as I proclaim the good of Nintendo it's amazing why I haven't ever thought of getting any stock in the company. I really need to look into that. Damned working-class mentality! Just gotta figure out how not to get hustled...
John Lucas