Added 2% to Nintendo @ JPY 52950
Q1 2021 results show a YoY decline and the market seem to price in a steady decline in earnings from here. However, I believe that not only can Nintendo earn stable earnings from here, it can grow its earnings slowly but steadily from here. I have a fundamentally different perspective on the nature of Nintendo’s business franchise versus the market.
As discussed before Nintendo Investment Update – The End of the Beginning, I believe that the Switch ecosystem is very healthy and given the increasing proportion of online games, the game revenue base in increasingly recurring and a console upgrade cycle would NOT require Switch install base to start from zero again!
Drivers for earnings growth – more 3rd party games + more long lifecycle F2P games + more membership revenue + growing install base
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