Nintendo stock drops to its lowest in 3 years

[famousringo]

Ail said:

famousringo said:
Serious question for the financial wizards out there: If a company is sitting on tons of cash, more than enough to pursue any future operations and expansions it might make, does its stock price really matter?

I'm guessing that the only real danger is a shareholder revolt booting people off the board, which doesn't seem likely in this case unless Yamauchi decides Iwata is incompetent. Is there anything else?

 

 

Weirdly enough the amount of cash you have matters less than how well you do reaching your projections....( of course being strapped for cash with little access to credit ain't good either....)

 

Lets say you make 2 billion $ profit and target 2.5 billion$ for the next year and only make 1.8 billion. Your stock is going to take a dive...

 

Now lets say you are loosing 500 million$ and target to loose only 200 million$ and make your target, your stock price is actually going to increase...

 

The main reason being that how much cash you have and what level of profit you make is already factored in the price of the stock and the stock mainly moves based on how well you stay on track and what the projections for the future are....

Investors react very badly to bad surprises/bad news too...( which is why if it doesn't look like Nintendo will hit their fiscal year 2009 targets they will probably try to announce it in advance and reset a new target).

I guess my question wasn't clear enough. I'm not asking what consequences cash holdings, profits and projections have on the stock price, I'm asking what consequences a low stock price has for a company which has no need for investor capital.

I appreciate the response, though.