Nintendo shares have weakened more than 10% since the beginning of 2021, and the current share price stands around $71.82.
Fundamental analysis: Nintendo continues to improve its position on the market
Nintendo is a Japanese multinational consumer electronics and video game company headquartered in Kyoto. After a correction of more than 10% since the beginning of 2021, Nintendo has caught lots of investors’ attention.
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Nintendo is one of the most powerful brands in the video game industry, and according to analysts, it can maintain its dominant market position.
Global video game sales hit $4.6B in February, which represents an all-time high. That’s up 35% from February 2020, while Nintendo shows surprising strength in hardware even against the newer consoles from Sony and Microsoft.
Nintendo sold 24 million consoles, and its profit surged by 91.8% Y/Y in the period from April to December. The company reported that it expects a further increase in revenues for the 2021 fiscal year, while the EPS growth should be consistent with long-term objectives.
“With the rise in popularity of smartphones, our strategy is to grow the population of people who play video games. I’m sure new offerings like cloud gaming and streaming will emerge, but they won’t be a top priority when choosing what game to play,” said Nintendo President Shuntaro Furukawa.
Nintendo is strengthening its brands’ monetization, and there is still room for gross margin to continue improving. It is also important to mention that Nintendo acquired Canadian software developer, Next Level Games recently, but the terms of the acquisition were not disclosed.
If we compare the company’s EBITDA of $6B and the market capitalization of $67.75B, we can notice that this stock is still undervalued relative to other companies in this industry. This company’s fundamentals are not bad, and according to analysts, shares of this company show potential for patient investors.
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Technical analysis: Nintendo shares remain in a buy zone
Nintendo shares have weakened more than 10% since the beginning of 2021, and at the current stock price, this company is reasonably valued, in my opinion.
The current support levels are $70 and $65, $80 and $85, represent the important resistance levels. If the price jumps above $80 resistance, it would be a signal to buy Nintendo shares, and the next target could be around $85.
Rising above $85 supports the continuation of the bullish trend for Nintendo shares, but if the price falls below $65, it would be a strong “sell” signal.
Nintendo continues to improve its position on the market, and according to analysts, shares of this company show potential for patient investors. The company reported that it expects a further increase in revenues for the 2021 fiscal year, while the EPS growth should be consistent with long-term objectives.