It’s Wait and Watch for Nintendo Stock
Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) is in the news again as the company’s much loved game franchise was released on the “iOS” platform of Apple Inc. (NASDAQ:AAPL). The expectations are quite high and the comparisons with the record-shattering Pokémon Go are inevitable. And there is a set of numbers released in the media that is mind-boggling. Does this mean that NTDOY stock is bound to soar?
Super Mario Run was released globally for iOS users on Thursday. And, according to analytics company Mobile Action, it became the most downloaded app on the Apple “iPhone” in its very first hour of availability. During the same period, it was also No. 2 among U.S. games in terms of most revenue and No. 7 among all apps.
Super Mario likely generated $1.0 million to $1.3 million in revenue globally, according to Mobile Action CEO Aykut Karaalioglu, who projects that it will make $60.0 million to $65.0 million in its first month. (Source: “Super Mario is already running to the top of the U.S. iPhone charts,” Recode, December 15, 2016.)
However, despite the initial success of that game, investors are still doubtful about NTDOY stock, which lost over three percent in the last trading session and closed at $29.35.
The cause for worry seems to be the premium pricing of the game. The Super Mario app is free to download but costs $9.99 if the users want to unlock the full game. This is in contrast to most mobile games that are much cheaper or can be played for free. So, despite the high number of downloads, the number of paying users may be actually quite less. This would be a huge hit to the mobile strategy of the company as well as Nintendo stock.
The success of Super Mario is important for Apple Inc as well. AAPL stock has been battered amid the controversies surrounding the stock under Donald Trump. Super Mario is Nintendo’s first iPhone game, and its success is extremely important to both Nintendo and Apple Inc.
The success of this mobile game, ahead of holiday season, is important as the company gets ready to release its hybrid console—”Nintendo Switch”—next year. Eiji Maeda, analyst at SMBC Nikko Securities, told CNBC that the console business is more important than the smartphone business for the company. (Source: “‘Super Mario Run’ downloads soar but investors aren’t convinced,” CNBC, December 15, 2016.)
NTDOY stock was hit earlier in October when the company’s upcoming new game console, the Nintendo Switch, failed to impress after the company released its video trailer.
Can Super Mario Lift Nintendo Stock?
The Super Mario iphone game has been seen as a risky bet for the Japanese gaming company, which desperately needs a blockbuster right now. There may be a large number of loyal fans of Super Mario who will have no problem in shelling out about $10.00 to play their favorite game on their smartphones. But as of now, the bearish sentiments are weighing heavily on NTDOY stock.
In the coming days, it will be clear whether Nintendo fans are willing to pay the high price for playing the game that they have loved since their childhood. If this happens, Nintendo stock could soar.