Read on Twitter![As most people know, I’ve been harping on Nintendo a lot recently. $NTDOYHere’s why[THREAD]](https://pbs.twimg.com/media/EgMXE8xVAAAw1tb.jpg "As most people know, I’ve been harping on Nintendo a lot recently. $NTDOYHere’s why[THREAD]")
Thesis at a glance:
Nintendo is building out an iterative console ecosystem to support their gold mine of intellectual property.
As a result, $NTDOY will be less cyclical and shouldn’t be as susceptible to boom/bust cycles.
Nintendo is building out an iterative console ecosystem to support their gold mine of intellectual property.
As a result, $NTDOY will be less cyclical and shouldn’t be as susceptible to boom/bust cycles.
Comparisons:
Lots of improper pattern matching going on here.
They aren’t Disney. The Switch isn’t the Wii. And Nintendo isn’t the Nintendo of the past.
Nintendo’s highly unique in general and they’re in a particularly unique spot right now.
Lots of improper pattern matching going on here.
They aren’t Disney. The Switch isn’t the Wii. And Nintendo isn’t the Nintendo of the past.
Nintendo’s highly unique in general and they’re in a particularly unique spot right now.
Intellectual Property:
This is why we see the $DIS comparisons. $NTDOY owns or has investments in all of the following...
- Pokèmon (Most valuable media company ever)
- Mario (Best selling video game franchise ever)
- Wii, Zelda, Donkey Kong, Kirby, Animal Crossing & more
This is why we see the $DIS comparisons. $NTDOY owns or has investments in all of the following...
- Pokèmon (Most valuable media company ever)
- Mario (Best selling video game franchise ever)
- Wii, Zelda, Donkey Kong, Kirby, Animal Crossing & more
Financials:
- $14.1B in TTM Revenue
- $4.4B in TTM Operating Profit
- TTM Net margins 23.3%
- Dividend Yield 1.86%
Latest Quarter:
- Revenue up 108% YoY
- Operating Profit up 428% YoY
- Gross Margins 59% vs 48% a year prior
- $14.1B in TTM Revenue
- $4.4B in TTM Operating Profit
- TTM Net margins 23.3%
- Dividend Yield 1.86%
Latest Quarter:
- Revenue up 108% YoY
- Operating Profit up 428% YoY
- Gross Margins 59% vs 48% a year prior
What Nintendo used to be:
For most of their history they’ve been dependent on hit consoles. When consoles sell well, they could sell more games, and the success compounded.
But when a console fell out of favor, the business struggled. We saw this with the wii in 2008.
For most of their history they’ve been dependent on hit consoles. When consoles sell well, they could sell more games, and the success compounded.
But when a console fell out of favor, the business struggled. We saw this with the wii in 2008.
The Switch:
Previously, software systems were linked to a particular console. But thanks to modern technology they can model the switch to be more like the iPhone. New hardware iterations to expand on the existing installed base.
Previously, software systems were linked to a particular console. But thanks to modern technology they can model the switch to be more like the iPhone. New hardware iterations to expand on the existing installed base.
“De-cyclifying” /1
In the words of @AboveAvgOdds
“Nintendo is changing from a cyclical “hits-driven” business to a secular growth juggernaut with stable recurring revenues, expanding margins, and declining capital intensity.”
In the words of @AboveAvgOdds
“Nintendo is changing from a cyclical “hits-driven” business to a secular growth juggernaut with stable recurring revenues, expanding margins, and declining capital intensity.”
“De-cyclifying” /2
A switch “ecosystem” ensures more sustainable top and bottom lines. If the Switch Lite is any indication of future iteration’s success, it looks like $NTDOY has a bright future.
Btw, go to any local store and I’ll bet you they’re completely sold out.
A switch “ecosystem” ensures more sustainable top and bottom lines. If the Switch Lite is any indication of future iteration’s success, it looks like $NTDOY has a bright future.
Btw, go to any local store and I’ll bet you they’re completely sold out.
“De-cyclifying” /3
Wondering why Nintendo is up ~6% this morning?
Because the “switch ecosystem” is coming to fruition. As of this morning, Nintendo will begin to ramp up the supply chain for the Switch Pro (or some new version)
Wondering why Nintendo is up ~6% this morning?
Because the “switch ecosystem” is coming to fruition. As of this morning, Nintendo will begin to ramp up the supply chain for the Switch Pro (or some new version)
“De-cyclifying” /4
As they shift to digital, margins expand dramatically. Last quarter we saw that shift in the digitization of game purchases. Digital sales as a percentage of overall software sales went from 38% to 56%.
As they shift to digital, margins expand dramatically. Last quarter we saw that shift in the digitization of game purchases. Digital sales as a percentage of overall software sales went from 38% to 56%.
Nintendo appeals to all ages.
Kids: Brands directly resonate with them.
College age: Beerio Kart functions as an integral component to most pregames
Parents: Elements of nostalgia are setting in. @ToddWenning highlighted this here https://intrinsicinvesting.com/2020/07/14/nintendo-capitalizing-on-nostalgia/
Kids: Brands directly resonate with them.
College age: Beerio Kart functions as an integral component to most pregames
Parents: Elements of nostalgia are setting in. @ToddWenning highlighted this here https://intrinsicinvesting.com/2020/07/14/nintendo-capitalizing-on-nostalgia/
Quick Valuation Notes:
Market Cap: $64.8B
Enterprise Value: $52.7B
- EV/TTM Sales: 3.7
- EV/TTM Operating Profit: 11.9
- EV/TTM Net Income: 16
Market Cap: $64.8B
Enterprise Value: $52.7B
- EV/TTM Sales: 3.7
- EV/TTM Operating Profit: 11.9
- EV/TTM Net Income: 16
