Nintendo share price rebounds by 10%
It is fair to say that Nintendo hasn’t quite had as strong a year as they were hoping, a situation that has caused their company shares to fall to a five year low.
Yet, this week has seen the company’s share price rise by a significant 10%. Whilst the Nintendo 3DS price cut may have been a cause, the real explanation for the boost is that Nintendo are expected to be included in the Nikkei 225 Stock Average. At the moment, Nintendo shares are traded on the Osaka Exchange.
Panoptic Management Consultants CEO Asif Khan explains, “Nintendo shares spiked 9.8% overnight in Japan on a rumor that the Japanese traded 7974 shares could be added to the Nikkei 225 index. This is great news for Nintendo shareholders as most companies on the verge of self-destruction are rarely added to benchmark indices. When stocks are added or dropped from market indices it forces ETFs, and mutual funds to buy or sell shares. In the case of Nintendo, any fund that attempts to mimic the Nikkei 225 will have to buy up shares.”
Khan continued, suggesting that there is the possibility that Nintendo could climb even further: “I believe we are seeing savvy buyers trying to front run that trade. If you know that there are big ETF and mutual fund buyers waiting for the rumor to become official, why not get in ahead of them? This is why I believe that Nintendo is up on the day. We own the NTDOY ADR for clients and in our personal accounts and this move above $19/share is just the beginning of what we believe is in store for this company. I believe NTDOY could reach $50-65/share over the next 3 years, so this $1.50 move today is welcome but not exactly a tectonic shift. We continue to like shares, and today’s rumor of the addition to the Nikkei 225 should be viewed as a vote of confidence in Nintendo’s future.
“Of course, we must wait to see if this rumor is true before we break out the Jigglypuff champagne glasses.”