| OceanJ said: I'm a Nintendo investor and really appreciate this thread. I've been wanting to talk about some NTDOY shares. So here's a question. American Nintendo shares (PINK:NTDOY), are ADR's (American Depository Receipts), which allow for American's to easily invest in foreign companies. But the shares themselves are subject to currency exchange rates. As the Yen gets weaker, the value of NTDOY shares goes down. For example say $1 = Y50 and a Japanese Nintendo share trades at Y50/share. It costs you $1 to buy a Japanese share. Now the Yen weakens to $1 = Y100, and a Nintendo share is still Y50/share...you only get 1/2 a share, and the share you bought's only worth $.50. But at the same time Nintendo's making a lot more money as the bulk of their sales is overseas. So the value of their stock should rise. How do we judge as an american investor in (Nintendo), whether a weaker Yen is better? Seems to be a balance equation. My guess it depends A) What the exchange rate was when you purchased your shares B) How much profit is overseas. Guessing under only some outlier circumstances, a Weaker Yen is better for American Nintendo investors. Anybody know for sure how to figure this out? |
You bring forth a very good question. I don't know the answer unfortunately. On my end though, I bought shares when they were at 14.40$ so I am in the red as of late. I should of sold when they reached 17.50$ but said to myself no, they are going to go up more, I'm kicking myself lol. Could of locked some good profits. Nevertheless, the stock is getting hammered currently and I don't know why. The Wii U sales are favorable and what people do not seem to realize is that Nintendo makes the bulk of their money on their handhelds. For example, a 3DS game will cost between 500,000 to 1.4 million to make compared to the 20 million + for consoles; thus, a greater profit margin. Furthermore, Nintendo never brings down the retail price of their games and usually have strong legs. Nintendo posted a loss last fiscal year because of the 3DS selling at a loss and the strong yen. Imagine producing over 13 million 3DS and losing 10-15$ per console and having exchange rates against you - it hurts.
Now, that equation is taking care of: Nintendo is selling the 3DS at a profit and even more so with exchange rates now in their favour. Though the Wii U may be selling at a loss, it only takes one game to make the Wii U equation profitable. Furthermore, Nintendo produces more 3DS than Wii U's; thus, profitabily overall is more insured.
Going forward into 2013, Nintendo is well positioned for the 3DS as it has an array of titles available to help it grow.
In Japan : Dragon Quest VII and Luigi's Mansion in Q4, Monster Hunter 4 in Q1, and most likely Pokemon in Q3.
North America: Fire Emblem, Monster Hunter 3G and Luigi's Mansion in Q4, Animal Crossing in Q1.
Wii U on the other hand I am more iffy. Consumers are more demanding these days and it is normal as they want to see what they get for their dollar. Nintendo is missing that 1st party software to justify the investment. Nonetheless, Nintendo does have Lego City Undercover and Wii Fit U as aces in their hands - if they do the marketing right! Do a marketing campaign with Lego aiming for kids and it will surely sell well. Furthermore, a marketing campaign that recaptures the magic of Wii Fit and the casuals will hop in. But like I said, the marketing has to be right. I believe that is why Nintendo didn't do that much marketing during the holiday season for the Wii U (they knew the Nintendo fans will buy the first batch), they are waiting for the above titles to market.
Hence, if Nintendo plays their cards right, we might see Nintendomination once more.
