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Nintendo stock split: NTDOY share price drifts after 10-1 stock split

By Rob Griffin

Edited by Jekaterina Drozdovica


Updated

A man playing Zelda on Nintendo Switch.
Nintendo carries out 10-1 stock split. – Photo: Shutterstock; Natalia Lobon

Video games giant Nintendo (7974) has seen its stock price drift lower this year, slumping in the run-up to its stock split carried out on 30 September. The Japanese company announced the 10-for-1 split earlier this year in the wake of investor calls to improve corporate governance. 

Shareholders are now waiting to gauge the effect of the move, which could improve the shares' liquidity. Will the stock split lift the share price? Here we take a look at how the company is performing and what the Nintendo stock split means for investors.

What is Nintendo?

Nintendo is a Japanese multinational video game company. It was founded back in 1889 by Fusajiro Yamauchi. He began manufacturing and selling Japanese playing cards, known as Hanafuda, in Shimogyo-ku, Kyoto, Japan. The company’s name was changed to the Nintendo Playing Card Co in 1951.

In the early 1980s, the company started its video game console business with the Nintendo Entertainment System (NES), followed later in the decade by the Game Boy. Alongside consoles, Nintendo also owns popular game brands such as Super Mario, Pokémon and Zelda.

The company listed stock on the Second Section of the Osaka Securities Exchange and on the Kyoto Stock Exchange in 1962. It has been listed on the First Section of the Tokyo Stock Exchange (TSE) since 1983 and on the exchange’s Prime Market since the TSE market restructuring on 4 April, 2022.

Nintendo stock can be accessed through American Depository Receipts (ADRs) traded in the US under the NTDOY ticker. 

Nintendo stock split: Latest developments

In the latest Nintendo stock split news, the game maker carried out a 10-for-1 stock split that was first announced on 10 May. It stated that each share of the company’s common stock held by shareholders at that point would be split into 10 shares. This is the first time the company has made such a move, according to the Nintendo stock split history.

The share price of the Japanese gamemaker failed to rebound after the stock split, slumping over 3% stock-split adjusted on Tokyo Stock Exchange as of 30 September.

What is a stock split? 

Stock splits occur when companies decide to divide existing high value shares into a larger number with a lower value. They may do this for a number of reasons. Often, it’s because the stock price has risen so high that it’s starting to deter new investors. 

Such increases can also make mergers and acquisitions more challenging. In other situations, a split may be useful if firms are looking to remunerate staff with share options.

However, a stock split won’t change the value of an individual’s shareholding, according to Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, who says:

“The important thing to note here is that the investor’s share of the overall company remains the same, it’s just divided into more units.”

The impact of a split on the stock price is more difficult to gauge and will depend on a number of company and sector-specific factors. Streeter added:

“A little extra demand for the shares might make a slight difference to the share price.”

Nintendo news: Latest results

On 3 August, Nintendo announced first-quarter results, which showed that year-on-year net sales declined by 4.7% to ¥307.4bn. Operating profit fell 15.1% to ¥101.6bn, while ordinary profit was up 29.6% to ¥166.7bn.

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The company also highlighted how sales from its dedicated video game business declined by 4.3% year-on-year to ¥295.6bn.

Gross profit, meanwhile, declined 4.3% year-on-year to ¥184.5bn due to the decrease in net sales. The company added: 

“Positive factors included the depreciation of the yen and the addition of Nintendo Switch – OLED Model with its high unit price to the hardware line-up.”
 “Hardware production was impacted by factors such as the global shortage of semiconductor components, resulting in a decrease in hardware shipments and subsequent decline in overall sales.”

Nintendo also noted how delays in the procurement of components meant it had “not been able to conduct production” as planned:

“However, we expect procurement to gradually improve from late summer towards autumn, giving us a clearer outlook regarding production for the remaining calendar year.”

Nintendo stock split analysis: Where next for the stock?

According to Kazunori Ito, director at Morningstar, the operating income guidance issued by Nintendo for fiscal year 2022, which ends in March 2023, was below his expectations.

He branded the numbers “conservative”, noting they were based on foreign exchange assumptions, implying a stronger yen than was currently seen, and a less than optimistic outlook. The analyst said:

“Despite the increased user base, Nintendo guides for a 10.7% decline in game shipments, which is too pessimistic in our view.”

The analyst was much more optimistic about the firm’s prospects, adding that “ the company can achieve our operating income forecast of ¥630 bn, which is 6.3% up from the previous year, driven by the larger user base and attractive game pipeline.”

Ito suggested that investors considered accumulating shares on dips, as well as sharing his view on the response to the Nintendo stock split:

“Nintendo announced a 10-to-1 split, which should be welcomed by the market by offering more flexibility to investors, as the split reduces Nintendo’s minimum trading amount to one-tenth.”

There are certainly positives associated with the NTDOY stock split, according to Danni Hewson, financial analyst at AJ Bell:

“It gives more investors a chance to snap up the well-known games behemoth at a far more reasonable price which does open up the market and is likely to increase demand and line the pockets of existing investors.”

Of course, the current macroeconomic backdrop is a consideration, Hewson added, as “gamers have had a tricky year and the next six to twelve months don’t look particularly clever with many people cutting back on discretionary spend.

“However, Nintendo has a great slate of new titles for next year which should generate headlines and interest…This is a company with a great track record and nice dividends which is a big appeal at the moment as people think about making their hard earned cash work for them.”

Price predictions for 2022 and beyond

Nintendo (NTDOY) was rated as a ‘moderate buy’, according to the views of seven analysts compiled by MarketBeat, as of 30 September. Five of them rated the stock a ‘buy’, one a ‘hold’ and one a ‘sell’. Their consensus view was that the Nintendo stock price could rise 428% to $272.35, with the most optimistic believing it may hit $494.69. The lowest prediction was a slight fall to $50. 

According to the algorithmic forecasts of Wallet Investor, as of the time of writing (30 September), NTDOY was expected to rise to $57.36 over the coming year. The site, which branded the stock as a “good long-term investment”, expected the Nintendo share price to enjoy a further modest uplift to $80.21 by September 2027. 

Note that analyst and algorithm-based price predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct due diligence before trading, looking at the latest fundamental and technical analysis, news and a wide range of commentary. Remember, past performance does not guarantee future returns. And never trade money you cannot afford to lose. 

FAQs

Did Nintendo do a stock split?

The company announced a 10-for-1 stock split earlier this year. It’s taking place on 30 September.

How much is Nintendo worth?

As of 30 September, the company had a market capitalisation of $4.72bn.

What are the two Nintendo stocks?

There are two routes into Nintendo stock. NTDOY is easier for investors as it only represents an eighth of a share. The NTDOF ticker, meanwhile, is more expensive as it represents a full share.

How many times has Nintendo stock split?

Nintendo stock split its shares 10-1 on 30 Septeber. The firm has not previously split – although investors have been requesting it for many years.

 

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