Jefferies analyst Atul Goyal has instructed his company's clients to buy Nintendo stock because the Switch could end up being even more popular than the Wii.
In a letter to clients, Goyal said:
Switch has turned out to be a stealth hit and is positioned to drive Wii-type [the company's last successful console] software sales and profits cycle. Switch's appeal to core-gamers (vs. Wii to casual gamers) is likely to drive higher attach-rate and higher earnings than Wii-era.
Nintendo is also actively targeting and courting its core-gamers with a very powerful game line-up in the year 1 of Switch's launch. We believe this is the most powerful and attractive line-up of any Nintendo game console ever.
Goyal points out that Nintendo's Japanese shares rose more than 300 percent in the 12 months following the arrival of the Wii back in 2006, and compared this to the 25 percent jump since the Switch's March launch. In short, there's room for more growth. In the US, Nintendo shares are up more than 50 percent over the past 12 months and have risen around 112 percent in the past year.
Goyal goes on to predict that Nintendo's annual operating profit could rise to 189 billion yen in fiscal 2018 and 423 billion yen in fiscal 2019; he previously estimated that profit would be 29 billion yen in the current fiscal year.
Nintendo is hoping that the Switch will indeed match the sales performance of the Wii, and it has been rumoured that production has been increased to around 18 million units for this fiscal year.
Everybody says that.
Honestly I think many analysts and investors (those with at least a slivver of gaming knowledge) will be watching the E3 event and will then decide depending on what is announced.
No way can I see the Switch "drive higher attach-rate and higher earnings than Wii-era." That's just bonkers.
Very optimistic. Here's hoping he turns out to be right.
Snap up Nintendo shares because the Nintendo switch is not in stock
Probably would've been smarter to do just before release. I can't imagine it'll jump much farther from what it is at now (roughly $40 a share up from around 30).
@SLIGEACH_EIRE Yeah. No way that YOU can see.
@SLIGEACH_EIRE Given how many people owned only Wii Sports--which is literally the lowest attach rate possible--Switch could easily see software sales than Wii.
@SLIGEACH_EIRE Why not? The Wii had a rather poor library and it was embraced by a type of consumer, who was completely fine alternatinv between, I dunno, Wii Sports and Mario Kart, plus the occasional shuffleware'ish minigame collection that 'plagued' the Wii.
Considering the fact that apparently more BotW Switch copies were sold than Switch consoles, there is a chance, that the Switch will indeed draw in many 'core' gamers (early 20s to mid 30s with disposable income and an actual interest in games - unlike most Wii owners at the time).
@crackafreeze Yeah, I am trying to get a second one for my kids, practically screaming take my money, but unfortunately, no product to buy. That money might end up going somewhere else if the stock shortage continues. And heck, its not even Holiday season yet.
To me I think the Switch will definitely surpass Wii U numbers (not really a prediction at this point), but not Wii numbers. I'd say it'll get very close to the Wii, but not quite.
What do they mean by attach rate? Do they mean software attach rate? Wii software attach rate was close to 9:1 which was similar to consoles at the time (ps3 & xbox360)
I expect as much too. Switch has a major chance to do better than the Wii just because everything about it just works for any kind of consumer. Minus the Playstation/Xbox fanboys. Basically, its appeal has a very good chance of reaching out to gamers and even non-gamers, multiple units make sense in a single household and the multiple ways to play make it even more versatile. You can take it to work with you, to a friends house, or set it up for a night of couch gaming with friends. Playing online anywhere is amazing and people need to give it a try! Splatoon 2, Mario Kart, Arms and now Pokken Tournament DX online while out of the house is going to be this generations motion control appeal. Don't knock the Switch just yet!
Nintendo sold 100 million Wiis and 915 million Wii games (835 million if you don't include Wii Sports).
The Switch will not reach those hardware numbers unless it lasts for a substantial amount of time on the market (like the ~12 years of the GameBoy/GameBoy Color). Switch software sales will definitely not reach 835/915 million.
@damo At the risk of you hitting me over the head w/ a hammer your title does sound very Switch hardware specific, where the guy only talks about software and making money on mobile. Heck the original article has the last few paragraphs about making money via it's new mobile games. I'm just afraid the entire thread will devolve into - will the Switch sell more or less than the Wii's 100m units - and that never appears anywhere in the article.
It's less about the Switch being more popular than the Wii, more about people who buy the Switch will buy more games than people who bought a Wii bundled w/ Wii Sports then never bought another Wii game. Aunts, uncles, old age homes. Switch will probably never be that popular, Wii was everywhere. People were literally dieing holding their pee for Wii. I don't see that happening again. But gamers, gamers who spend money, 75 million Switch could make Ntinedo a whole lot more money than 100m Wii owners.
Funny how the guy never mentions DS though, that was selling some games and making them some money during the Wii time period as well. What was there 160m of those? Switch would need to better DS and Wii after 3DS goes away, that's gotta be tough. Guess that's where mobile comes in.
But yeah, buy the stock now, b/c it probably will go higher between now and 2019. Why wouldn't' it. Plus theme parks. And licensing, which they seem to be doing a lot of lately. And the Tokyo 2020 Olympics I'm betting will be Nintnedo related, even if just more Mario.
I wouldn't touch Nintendo Stock till after E3. Nintendo's stock is notorious for dropping after E3. Until they hit one out of the park it probably will again.
Getcha your ports here! We gotcha ports here! Still like my switch though. Nothing like being an early adopter.
Switch is two times more expensive than Wii. Let's take a look at recent history. Five months after 3ds initial launch in America and after fewer than 900k 3ds units sold, 3ds dropped price from $250 to $170. Nintendo suffered an ephemeral loss but gained at the long run. Switch is a bigger hit but i think Nintendo should make some brave decisions at current gen as well.
Nintendo shares will continue to go up, and not just due to the Switch.
The US will most likely raise interest rates 3 more times this year, which will raise the value of the dollar vs the Yen, and in turn, send more Yens back to Nintendo for every $1 sold of goods & services in the US. The entire Nikkei went up over 2% last week, on the day when the US jobs report came out, which showed given the labor marke data, that interest rate hikes are still in track to happen.
So all Japanese companies with big US presence will get a bit of a bump in earnings due to currency fluctuations as well. As far as the Switch, we haven't even hit Christmas yet. If they peak this year, it'll be in the run up to Christmas.
E3, if disasterous, could sink shares but I doubt it will be. Momentum is clearly in Nintendos favor.
@SLIGEACH_EIRE Attach rate for sure, earnings that's a whole other basket to contemplate, the only way I forsee this being possible is if Nintendo was taking in a higher profit margin on all games/acc and consoles sold, still it seems unlikely.
If Nintendo doesn't release another generation for say 8-10 years and just does say, 3-4 hardware upgrades/iterations for the Switch, it could easily sell 100 million units.
@SLIGEACH_EIRE please specify why you don't think so; if all of the Stars are aligned I can't for any reason see why not.
After the direct today I wouldn't buy anything until E3.
@ottospooky There's a whole pile of reasons like it's too expensive, lack of 3rd party support, it has nowhere near the level of buzz and hysteria that the Wii had. It's relying heavily on Wii U ports, another one announced today, paid online coming down the road, crazy expensive accessories, convoluted voice chat, still no VC, web browser, apps, etc. Poor manufacturing numbers. The list goes on.
@Spoony_Tech Best announcement for Nintendo stock at E3 would be 10 million SNES Mini for $79.99 on store shelves this holiday. And another 2 million NES Mini for $59.99. Limited bundles for $129.99. And Super Mario Jump $4.99 immediately but for 1 week only, then going up to $7.99.
Why? Because of some Wii U ports, ARMS and Mario Odyssey? I don't see how that's the most powerful lineup of any Nintendo console ever.
"Nintendo sold 100 million Wiis and 915 million Wii games (835 million if you don't include Wii Sports)."
Exactly. Can't see that happening, even though the Switch is clearly going to do very well.
Nobody bought the Wii U so most people will just see a Nintendo that by the end of the year, less than 10 months after launch, has Mario/Mario Kart/Zelda/a Mario spin-off/a Pokémon spin-off/a Fire Emblem spin-off/Splatoon and Xenoblade sequels and three new IP from Nintendo.
Compare that to where other Nintendo consoles were after 10 months.
I don't CARE if still lack of This or That.
Still lack of 3rd party, You complained.
Already got some 3rd party, you complained again because you don't like it.
Still no VC , you complained it.
Has some VC, you complained.
Any movement from Nintendo, you complained all !
What do you want then ?
A Video games from Heaven ??
Complete with 1000% features that All your desires ??
Geez... keep dreaming.
There is NO PERFECT machines can be created.
Just accept Nintendo Switch Just The Way It Is !
Is it hard to do rather than complaining EVERY single Nintendo movements ??
Why don't you just BUY Switch and STOP complaining to prove yourself that you can facing with your "NEMESIS" ?!
@SLIGEACH_EIRE Nowhere near the hype the Wii had? What do you mean by that?
Yeah, I can see that happening. The Wii, while an absolute smash hit hardware wise, was a lot weaker in games sales. A lot of people only had Wii Sports, which as a pack in isn't even a single game purchase separate from the console. Also keep in mind how much cheap shovelware ended up on the Switch. Hardcore gamers, however, will be prepared to buy more, often pricier games, usually from Nintendo themselves. They're also more likely to consider buying accessories, such as the Pro Controller. However, this is still extremely optimistic- Even though software sales will almost certainly be great, we don't know for a fact if the Switch's momentum will last, and even if it does, the Switch will need to get to 80 million to really be able to compete in profit margins- more money from significantly fewer consoles isn't going to outdo the Wii.
Has the Switch become a fad like the Wii experienced?
Unless it has, personally think speculation like this is premature and kind of silly.
Make no mistake, I think the Switch will DEFINITELY be a successful console in the long run, but unless it has its price reduced to around where the 3DS is sitting, bonkers sales numbers are going to be a ways off.
My one fear is they're going to try and replace the 3DS with it still at its current price, which could alienate a lot of people who are unwilling or unable to spend that amount of money on a game console.
"In the US, Nintendo shares are up more than 50 percent over the past 12 months and have risen around 112 percent in the past year."
Which one is it then?
@SLIGEACH_EIRE You are the last person to say something positive about Switch so your opinion doesn't count. Simple as that.
@SLIGEACH_EIRE Attach rate I can see being true. The Wii had a fairly poor attach rate if I remember right. Something about how more casual gamers weren't purchasing too many games. The Switch has the better attach rate aspect going for it since it seems to attract more of the semi-casual (for example people that stopped gaming for awhile or left due to the Wii/Wii U era) and core audience than Wii did.
Profitability will definitely be tough to beat let alone meet. The Wii was sold at a pretty good profit at launch. From my understanding the Switch is also at a profit but not a very big one (and possibly eroded by the need to fly in additional consoles to meet demand in NA and Japan). Its software sales would have to be incredible in order to even get close to Wii profitability.
These "Wii had a poor attach rate" comments are patently false and need to stop.
Nintendo has sold over 100 million units of Wii hardware and 915 units of Wii software. That is a 9.15 to 1 game-to-console attach rate. The only Nintendo console in history with a higher attach rate was the Gamecube. If you don't count bundled software like Mario Bros, Mario World, Wii Sports etc, that fact still remains the same.
@Anti-Matter I'm with you at 1000%. This guy needs better thoughts.
I like how the term "stealth-hit" is used. Please, everybody knew it was gonna be a hit from the reveal presentation.
All this talk about games and no one is talking about the Big Game — stock manipulation by "analysts" pumping or dumping stuff in their financial interest?
@Anti-Matter that's right man. No one should have a opinion different to yours.
If you always get angry why don't you press the ignore button. Why the same boring comment over and over again. It's entertaining tho
@Ralek85 poor library? I could mention 50 or more critically acclaimed games from that console right now.
Headline is misleading....
I've been wanting to get into stock. I've got two coworkers making a mint on bitcoin right now. I think I need to dip my toes in the water.
@fafonio What does "critically acclaimed" even mean? That's back-of-the-box blurb talk. I didn't mean that the system had no good games, but considering it's overwhelming commercial success, it was not exactly flooded with these either.
Way more important though, the best games by far on the Wii, were Nintendo games: Twilight Princess, Skyward Sword, Super Mario Galaxy 1/2, Metroid Prime 3 etc. and equally important, those were 'typical' Nintendo genres.
Name 5 great 1st-person shooters on the Wii? 3rd-person shooter? Racing sims? RPGs? Open-world games? Sports games?
I mean, if you want to talk "critical acclaim", let me say, that according to metacritic, 3 out of the 15 most acclaimed Wii games were Rockband games, with World of Goo sitting at 4. Furthermore those 15 include Resident Evil 4 and Rayman Origins ... great games no doubt, but also games available on almost every system under the sun now.
I was talking about the appeal to core gamers, and I think in that regard, what the Wii had was pretty much it's first party games and not much else (the only reason the system had ANY RPGs for example in the west to play at all, was massive fan pressure).
So yeah, I think the appeal to core gamers was super limited and the astronomical success of the platform did nothing to change that. You are free to disagree obviously
IF they can solve supply issues I think it will outsell the Wii, no question
I'm up over 40% and counting. I think they will hit at least 60 per share. I may dump it if I hit the 100% mark. I honestly hate investing in the stock market, it's purely gambling.
@Neram First year games
Breath of the Wild
Mario Kart 8 Deluxe
Is that the best ever? I don't know, but there's certainly something for everyone. I was most hyped for Zelda, Xenoblade 2, and NBA 2K personally
"the guy only talks about software and making money on mobile"
Atul Goyal: "Switch has turned out to be a stealth hit and is positioned to drive Wii-type [the company's last successful console] software sales and profits cycle. Switch's appeal to core-gamers (vs. Wii to casual gamers) is likely to drive higher attach-rate and higher earnings than Wii-era."
Selling more Switches means selling more games means more profit. Not sure what you're getting at?
"Switch's appeal to core-gamers (vs. Wii to casual gamers) is likely to drive higher attach-rate...."
HIGHER ATTACH RATE, not more sales outright than Wii.
Nintendo Life PLEASE have someone edit these things before posting them.
As much as I love the Nintendo Switch, I still don't think it'll reach Wii sales. The Wii was just an extremely lucky coincidence with the casual customer, back then when phone games were still a novelty and the Wii just happened to appeal to that market specifically in a perfect moment. The Switch is more targeted towards those who are more into video games aside from smartphone games. For sure it'll outsell the Wii U, GameCube, and even the N64. But no way it'll outsell the Wii.
Do tell. If U.S. (where I live) increases interest rates, does that mean I make more interest for having money in a savings account, or that i pay more interest on a mortgage or whatever?
@Damo Please see what Mr @XCWarrior said, Post #55, he's always been more literate than I am.
Never once does he say Switch hardware will outsell Wii, he doesn't even allude to it.
In theory, your savings account return should increase, but many of the large banks won't pass that on to you and instead keep the difference for themselves as profits. The reason they do that is customers don't react and change banks, so they figure they don't care. Very greedy from the banks. So shop around when you're looking at your savings rate, it varies tremendously by bank.
For a mortgage, it depends on whether it's fixed or variable. A fixed mortgage won't change rates as the rate is set when you get the mortgage, while a variable one may change if it's outside its fixed rate grace period. Usually, those have 5 or 7 year fixed rates and then they adjust annually.
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