Great update! I have a question for you though, do you know if Valueact is still a shareholder in the company? I know they had bought some shares in 2019/2020 but I can't find anywhere else if they sold their stake. Thanks!
Thanks for the write up! I tend to agree with your points. One thing I have issue with though, is the slow pace of innovation. The next generation switch could have been released much earlier, but it’s taken until 2025 for them to get their act together. Thoughts?
I think that slow pace of innovation is more a feature than a bug to be honest. Nintendo does not need to innovate like Sony and Microsoft because it's vertically integrated and decided to play the game through software. In fact, if anything, all the rapid technological innovation has acted as a toll on both Sony and Microsoft. The Switch has performed beautifully for many years, so I see no reason why they would iterate faster.
Thanks for your article. What about the company itself, were there any changes in staff during this year? Or were some decisions made that define the future of the company? I mean there should be a model that explains the drop in stock price. Internal value is not in direct proportion with stock price.
Well Nintendo is very cash generative because it outsources its Capex to third parties (obviously this is represented in the gross margin)and not much to say about the balance sheet, it's impecable!
Great update! I have a question for you though, do you know if Valueact is still a shareholder in the company? I know they had bought some shares in 2019/2020 but I can't find anywhere else if they sold their stake. Thanks!
Thank you, unfortunately I have absolutely no idea!
No problem, thanks for the quick reply!
Thanks for the write up! I tend to agree with your points. One thing I have issue with though, is the slow pace of innovation. The next generation switch could have been released much earlier, but it’s taken until 2025 for them to get their act together. Thoughts?
I think that slow pace of innovation is more a feature than a bug to be honest. Nintendo does not need to innovate like Sony and Microsoft because it's vertically integrated and decided to play the game through software. In fact, if anything, all the rapid technological innovation has acted as a toll on both Sony and Microsoft. The Switch has performed beautifully for many years, so I see no reason why they would iterate faster.
Great update. Nintendo is one of our largest positions. Just posted our report on them if your interested. https://open.substack.com/pub/schwarcapitalmanagement/p/nintendo-ntdoy-equity-research-report?r=2m1atw&utm_medium=ios
Thank you, will read!
Thanks for your article. What about the company itself, were there any changes in staff during this year? Or were some decisions made that define the future of the company? I mean there should be a model that explains the drop in stock price. Internal value is not in direct proportion with stock price.
I think the future of the company will be good, nothing changed this quarter about the long-term thesis.
Terrific article. Could you comment on the balance sheet and cashflow?
Well Nintendo is very cash generative because it outsources its Capex to third parties (obviously this is represented in the gross margin)and not much to say about the balance sheet, it's impecable!
Thank you.