Nintendo's Stock Value Creeps Back Upwards After a Tricky April
Posted by Thomas Whitehead
Going in the right direction at the moment
2014 has been a slightly peculiar year, so far, for Nintendo. It emerged from 2013 on the back of a breezy, confident Nintendo Direct in December and positive noises that the Wii U — particularly — wouldn't endure a games drought in the first half of the year. With respect to some download developers that attempted to fill out the roster, the opening quarter of the year was rather quiet for the console aside from Donkey Kong Country: Tropical Freeze; it felt like a bit of a drought to us, though April and May have brought a host of excellent download games and, of course, Mario Kart 8 is upon us.
That's not to say all has been quiet with Nintendo, quite the opposite, and as this is a Holiday at the time of writing — and not much is going on — we've had a little look at how various happenings have effected Nintendo's stock market performance — a key indicator of company health. Don't say we aren't generous.
As we suggested earlier, it's been a wacky 2014 for Nintendo's accountants to handle. There was an enormous spike in share price in early January, linked to various events including China formally outlining the lifting of its console ban. Following that, however, Nintendo shocked pretty much everyone when, prior to its Q3 financial results, it announced a dramatic lowering of sales expectations, particularly for the Wii U. They were grisly figures, and over the space of around four weeks shares tumbled and lost a lot of value; an important detail, however, is that shares merely returned to their pre-bump level, essentially wiping out that crazy increase of early January.
Nintendo, notably, failed to regain much ground after Satoru Iwata gave a strategy presentation — in early February — in which he announced, among other things, a major summer system update for Wii U, DS games for the Virtual Console, a greater E3 focus on NFC (near field communication) and a mysterious new QOL (Quality of Life) platform. As was reported at the time, some investors were clamouring for Nintendo to announce moves into smart device markets, whereas the company simply committed to apps and services on these platforms to drive consumers towards Nintendo hardware.
The past month has shown some solidity in the markets for Nintendo, despite the company announcing financial year losses and posting conservative sales estimates for Wii U and — to a degree — the 3DS. In his post-results briefing Satoru Iwata spoke about short and medium term initiatives helping Nintendo return to profitability, while it was also made clear once again that the company wouldn't shy away from expanding into other areas of business (such as QOL). It was also indicated that Nintendo would produce new hardware specifically targeted at developing countries and new markets, the company also stating that it's looking into its options for China. Notably, Sony and Microsoft have both already announced distribution plans for the Chinese market.
The chart below — via Bloomberg — shows the past month of movement, with a steady trend upward since Nintendo's post financial announcements, while hype around titles such as Mario Kart 8, Pokémon Omega Ruby & Alpha Sapphire and perhaps even Hyrule Warriors potentially helped.
For context, below is the Nintendo stock price over the past year — via Bloomberg again — that gives us a broader idea of its current performance in the financial market. The creep upwards in May is, once again, dragging Nintendo back to what's been a relatively consistent level, but the company is at least currently in better shape than in the immediate aftermath of E3 2013. At that event Nintendo struggled for attention against the presence of the new PS4 and Xbox One, with share value (in Japanese Yen) in that period briefly dipping into four figures.
At the time of writing Nintendo's had a good day of trading in its homeland, closing at 11,855 Japanese Yen, a 2.29% increase over the previous day. While it's pleasing that a steady decline throughout the month of April has moved in the other direction in May, Nintendo's past year has shown that the current numbers reflect a relatively consistent level; if the company gets E3 right and delivers the results it's targeting and pitching to shareholders, that line graph may keep on going up. As this year has shown, however, share value can be a temperamental, unpredictable beast.
For the past year increases, like this in May, have merely been green shoots, so the company will hope for a sustained improvement. Even if it means it's not all about the games, and a little to do with Quality of Life.