Research & Invest
Investor, Institutional Asset Management Background
Nintendo is an exceptional company with irreplaceable IP and plenty of cash, so the stock near 2.5-year lows is not a weed to cut. As Peter Lynch showed with Taco Bell, it is very hard to go bankrupt without debt. The Switch 2 was a home run after eight years, Mario, Zelda and Pokemon games cannot be played on PlayStation, and a Zelda release for PS5 could unlock billions. x.com x.com x.com
Nintendo could see strong near-term demand as parents snap up the Switch 2 with Pokopia, Zelda and Mario bundles ahead of memory-driven price pressure, a boost that may land just as memory prices start falling by 2027. TD Cowen sees memory-cost fears as well founded for Nintendo, raising Switch 2 manufacturing costs, but that long-term bear case only holds if memory prices stay high for 4-6 years. x.com
Nintendo's Zelda remake demand points to franchise potential short-term valuations miss. Nintendeal reports 100,000-plus Ocarina of Time Switch 2 copies sold on Amazon in a month, versus 11,000-plus GTA 6 code-in-box PS5/Xbox copies. NintyPrime notes this is one retailer, one country and physical copies only. It is a remake; the next two 3D Zelda games this generation should do even better. Nintendo's valuation should reflect the next few years and decades, not just the near term. x.com
Nintendo's low-cost Ocarina of Time remake can draw buyers to Switch 2 and its lifetime software value. Reservations for the New York midnight launch have sold out; the remake's development cost is estimated at $40-80 million versus more than $1 billion for GTA 6, and Nintendo keeps the platform fee. x.com
Nintendo's Switch 2 is being squeezed by memory costs from the AI data center boom. The US price rises from $449.99 to $499.99 in September, with similar hikes in Canada and Europe, and Nintendo expects 16.5 million unit sales this year versus 19.9 million last year; some analysts think memory prices won't cool until 2028. Even allowing for Nintendo's usual sandbagging, the stock is not screamingly cheap or asymmetric. x.com x.com x.com x.com
Zelda: Ocarina of Time preorders suggest Nintendo has another Switch 2 seller despite competition from GTA VI. Its listing shows 100K+ bought in the past month; four Switch 2 games already have 3M+ sales, with a fifth on its way. Hardware sales have been high without the heavy hitters. Pokémon and likely a 3D Mario follow next year, and Pokémon and Zelda fans may have little overlap. x.com x.com
Nintendo looks attractive at $14 as the Apple of gaming. It makes great, easy-to-use, family-friendly hardware and takes a platform fee on games and apps sold on it. Nintendo Switch Online at $50 a year brings in $1.7 billion of subscription revenue. Pokemon Pokopia, just released, is an evergreen title, and a new Mario movie arrives April 1. x.com x.com
Nintendo and Sony sold off because memory prices rose, but consoles and video games are entire industries and identities, and gamers have the highest willingness to pay for tech of any consumers. They spend $3k on lag reduction and big screens and $1k on vibrating chairs. x.com
Nintendo sits on the most valuable IP catalogue in entertainment and still looks underpriced relative to Disney. The Super Mario Galaxy Movie's $372.5 million global opening weekend, the biggest of the year so far, shows that huge box office for video game IP films is the new normal. x.com
Nintendo's shares trade inversely to memory because rising memory prices raise costs it cannot fully pass on. Its five-year yield should exceed 5%; that combination looks better than a hypothetical 5%-yielding Treasury trading exactly inversely to Korean memory. x.com
Durable entertainment IP is a special niche, because it is rare to confidently predict a high-margin product's relevance 20 years out. The clearest examples are Nintendo with Mario, Comcast with Harry Potter, Netflix with NFL and college sports, Spotify, Amazon Prime and Disney's animated movies. Many can be owned, though some are purer plays and some cheaper than others. x.com x.com
Take-Two looks too cheap with GTA 6 on the horizon. There seems to be massive pent-up demand not just for GTA but for any reasonably good AAA game, and little real competition is left in that segment. x.com
