Nintendo7974
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Fair Value
JP¥8k
Share price09 Jul
JP¥7.29k8.8% undervalued intrinsic discount
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1Y-43.76%
7D3.76%

Nintendo facing the Ram shortage situation

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Published
06 Jul 26
Updated
09 Jul 26
Views
72
Invested

Last Update 09 Jul 26

Nintendo will phase out switch 1 in Europe by 20207

Nintendo's phase out of switch 1 in Europe during 2027 will affect sales. The 200 Million units threshold of Switch 1 + 2 will still be hit in 2027. How fast retailers will sell through remaining stock remains to be seen.

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Nintendo currently holds a competitive advantage because the unit price of the switch 2 undercuts the steam deck significantly. Apparently supplier arrangements have secured the supply of LPDDR5X 12 gb modules. The absence of GTA VI on the console during the holiday poses a significant risk. Currently the switch 2 is not serving the casual audience. Casual players might not opt for a switch 2 and stay with their switch 1. The switch 2 seems to target a more dedicated audience which overlaps with it's competitors namely ps5 and xbox. PlayStation 6 launch in 2027 may pose a risk. In the handheld and hybrid division Nintendo is the Monopoly with more than 90% of the market share. Sony and Microsoft have announced price increases higher than the price increases of Nintendo which puts Nintendo at the lowest barrier of entry having not only the cheaper switch 2 but also offering the switch 1 which is the only console at a reasonable price value. The 4 Gb of ram in he switch 1 helps to keep cost low. Housholds seem to purchase multiple devices. The software lineup for 2026 is rather weak with it's only blockbuster being Ocarina of Time. New entry Tomodachi Life caters to the female audience with good sales. In 2027 however Pokemon Wind and Waves as well as some unannounced mainline titles will drive sales. Therefore sales and revenue will increase in 2027. The effects of Nintendo being significantly cheaper than it's competitors through successful supply chain management and fair value product design still has to be quantified and will crystalize during the first 2 quarters of 2027. Total installment base across switch 1 and 2 will hit 200 million devices in 2027. The movie production serves as a complementary marketing tool also leading to increased sales of software and hardware. Further research needs to be done to pinpoint the exact numbers.

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The user richard_53rym has a position in TSE:7974. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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JP¥7.61k
FV
4.2% undervalued intrinsic discount
4.00%
Revenue growth p.a.
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Fair Value vs Share Price

JP¥8k
vs JP¥7.29k8.8% undervalued intrinsic discount
PastFuture-16b3t20152018202120242026202720302031Revenue JP¥3.4tEarnings JP¥626.0b
8.1%
Revenue growth
18.3%
Profit margin

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Company analysis

Flawless balance sheet, good value and pays a dividend.

Market capJP¥8.4t
PB2.8x
Estimated Growth2.9%
Dividend Yield2.2%
Full analysis

CEO & management

Shuntaro Furukawa
CEO
8.1yrs
CEO Tenure

Develops, manufactures, and sells home entertainment products in Japan, the Americas, Europe, and internationally.