Should I Invest in Nintendo? Explaining the Odds

invest in nintendo

There are plenty of times when Nintendo has a successful product like Super Mario Bros and Pokémon. Then, more people show an interest in investing through the stock exchange. Nintendo can be a profitable stock, but as with all stocks, there’s risk involved. However, the question remains for many. Is the decision to invest in Nintendo wise or risky?

You may be a fan of the video game company. In this case, you should research Nintendo’s financials and future plans to minimize the risk of losing money. To help you quickly make a decision on whether or not to make an investment in Nintendo, we have summarized what you need to know about the company below.

General Information about Investing in Nintendo

Nintendo was founded on September 23, 1889, by Fusajiro Yamauchi in Kyoto, Japan. In the beginning, Nintendo produced and marketed Hanafuda cards. It grew into one of the top video game companies. Nintendo is believed to mean leave luck to heaven. However, there aren’t historical records indicating its meaning.

When Yamauchi retired in 1929, he handed over the reigns to his son-in-law Sekiryo Yamauchi. It’s customary in Japan to let one’s son take over the company. If the owner doesn’t have a son, he leaves it to his son-in-law. This was the case for Nintendo. The company entered the video gaming industry in 1972 with the Magnavox Odyssey console. Nintendo’s first console of its kind was released in 1985 and was a huge success. Super Mario Bros is one of the most well-known video games that was played on the Nintendo console.

Want to know if your values are in line with Nintendo’s? Three of their core values are originality, flexibility, and sincerity. They believe in adapting to the constant changes in the world. This is good news for those who want to invest in Nintendo. This way, they know that the company can keep up with rapidly evolving technology and consumer psychographics.

Is Nintendo Publicly Traded?

Yes, Nintendo is a publicly traded company. The other two members of The Pokémon Company joint company, GAME FREAK and Creatures, are privately held. Ordinary stock shares are only traded via the Tokyo stock exchange and Osaka stock exchange. However, others who want to invest in Nintendo can do so through American Depository Receipts (ADRs). The receipts are available on the over-the-counter market.

Nintendo went public in 1962 after its notable success with books on how to play their Disney playing cards. At the time, Disney playing cards were popular. Over 600,000 packs were sold in the first year alone. Fusajiro’s grandson Hiroshi Yamauchi was leading the company at the time. He then had realized that the playing card industry would decline. This happened after he took a visit to the United States. He began dabbling in other markets to keep Nintendo going strong once the playing card industry declined. His insight and willingness to try new things kept Nintendo thriving after the playing card industry finally started to fall.

Nintendo Stock Price Estimate

In general, the Nintendo stock price ranges from $26-$35. The average price of NTDOY stock is $32.48. At the time of this writing, Nintendo’s stock price low and high were $16.66 and $44.41.

How to Invest in Nintendo (NTDOY vs NTDOF)

  • U.S. investors who want to invest in Nintendo must buy ADRs, because Nintendo is on the Tokyo and Osaka stock exchanges.
  • Each NTDOY ADR equals 1/8 of a Japanese Nintendo share. If you want to buy a single Japanese Nintendo share as an American, you’ll have to purchase eight NTODY ADRs over the counter. Or you could buy one share of NTDOF ADR. It is the equivalent of one Japanese Nintendo share.
  • Keep in mind: NTDOY ADRs are more liquid than NTDOF ADRs. Hundreds of thousands of NTDOY ADRs trade hands each day, compared to thousands of NTDOF ADRs. Price movements in NTDOF are larger due to smaller volume. NTDOY ADRs are usually the better choice, but you can be successful with NTDOF ADRs too.

Answering the Debate: Should You Invest in Nintendo?

Nintendo partnered with Niantic to create an augmented reality mobile game for Pokémon, which was a huge hit. Even non-gamers heard about it numerous times in the news. In three months, Nintendo earned more money thanks to Pokémon Go than it did in the entire year. However, you should also be aware that natural disasters in Japan can impact the price of Nintendo shares. During the earthquake and tsunami in 2011, Nintendo’s stock fell from $38 to $11.

Nintendo’s financials aren’t outstanding, but they’re not bad either. Nintendo has been profitable over the past four years. Their gross profit ratio at 43.8 in March 2016, compared to 39.0 in March 2015. The downside is their net sales have steadily decreased over the past five years. In March 2012, Nintendo reported 647,652 net sales. This number has dropped to 504,459 in March 2016. We don’t think this trend will continue forever, but increased company revenue could reverse that trend. Remember, Nintendo has been around since 1889 and has a way of rising back to the top.

nintendo pokemon go

When Can I Buy Nintendo Stock?

You can buy Nintendo stocks as ADRs whenever the U.S. stock market is open. The New York Stock Exchange (NYSE) is closed during officials holidays and events of major disruption. It’s otherwise open from Monday to Friday at 9:30 AM to 4:00 PM EST.

Wrapping Up the Game

As with all stocks, whether or not you invest in Nintendo is a decision only you can decide once you know the company’s financials, history, and values. Nintendo is well off enough financially to make investing in the company worth it. But you must keep in mind that the company sometimes goes through slow periods before having a major success. They are a company likely to continue lasting long because they value flexibility and originality. Nintendo doesn’t become stuck in their ways and unable to consider new markets or new ways of doing things. Companies that lack flexibility often struggle to maintain success. Overall, Nintendo is a good company to invest in. This is especially if you’re a fan of the brand or agree with their values. Additional investment advice from your financial advisor wouldn’t hurt of course.

Are you going to add Nintendo to your stock portfolio? Why or why not? If you buy or sell, feel free to share any further insights on NTDOY vs NTDOF in the comments below.

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