Nintendo (NTDOY), the world’s fourth largest video game publisher and one of the top three hardware and software developers, could be a hot investment opportunity for anyone looking for new stocks at the end of 2017. Thanks to the hugely successful launch of their latest console, Nintendo’s value has been rising and the company could hit record profits by the end of the fiscal year.
The video gaming entertainment industry represents a unique area of investment. Software sales regularly exceed more than $25 billion per year, and it is estimated that the game company industry contributes over $11 billion to GDP in the United States. The industry has generated a number of publicly traded companies, creating diversification opportunities for investors who have typically traded in other industries.
Value Growth Supported by the Release of the Nintendo Switch
Nintendo released their Switch console on March 3, 2017. The console is unique in the marketplace because it offers a hybrid home and portable gaming experience. Consumer and industry media hype was significant for the device, and that hype translated to strong sales of both hardware units and first/third party software titles.
Nintendo announced in December that they are increasing console sale forecasts to 14 million units by March of 2018, an increase of 4 million units when compared to their previous forecast. First party software titles like The Legend of Zelda: Breath of the Wild, and Super Mario Odyssey are also selling strongly, and the company has increased software sale forecasts from 35 million, up to 50 million.
With the holiday season far from over, most analysts have made sales predictions that closely align to Nintendo’s own numbers. Nintendo itself expects profits to hit $1.06 billion for the financial year.
Why Should Investors Care About Nintendo?
The gaming industry is lucrative for investors, because it has continued to grow in recent years. Nintendo is an example of a company that has large cash reserves and strong and stable leadership. They also have a loyal customer base and a long established reputation for quality hardware and software. In just the last year, Nintendo earnings have grown by over 500%. Stock value has risen by almost 100% (88.28% year to date increase as of 12.12.17). Although Nintendo traditionally competes with both Sony and Microsoft for hardware sales, they are the only current option for a hybrid home and portable experience.
Consoles typically sell strongly throughout a lifetime of three to five years, which could signal continued growth for at least the next two years at Nintendo. Stocks for this company have traditionally been very strong and stable, and a hit console could mean better returns for anyone that wants to start investing in the video gaming industry.
While there’s no guarantee of future performance, for now it looks like Nintendo is one of the winners in gaming. Stocks in the company could represent a great stepping stone to start exploring similar options in a continually growing industry.
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