Nintendo stock drops to its lowest in 3 years

[NJ5]

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?

I'm not a financial wizard, but off the top of my head the only dangers of a too low stock value are:

1- Harder to raise cash by selling stocks of your company.

2- Higher risk of getting taken over in a hostile way.

3- the one you mentioned.

Number 1 is not a problem for Nintendo as they have plenty of cash and few fixed expenses (few employees, few or none factories owned by them).

Number 2 should not be a problem either, after all Nintendo's stock has been much lower than it is today and they never got taken over... they're a stable company and shareholders know that.

Number 3 shouldn't happen either.

As for Nintendo's low stock value right now, one of the big reasons is the strength of the yen relative to the Euro and Dollar. I sold all my Nintendo stock when I realized that I was gambling more on currency exchange rates than on Nintendo's business itself.

Another reason may be the lower Wii sales compared to last year, of course, but the recession is affecting almost every company.