Friday, August 12, 2011

What Is Nintendo Worth?

Nintendo has had a stream of bad news lately that has hurt their stock price. A price cut for the 3DS months after it was released, a poorly received (according to investors) Wii U, and slowing sales of the Wii and Nintendo DS. Nintendo's stock has dropped from about $40 in March to $18 this morning.

Nintendo has roughly 127,200,000 shares outstanding so at this price the market is saying Nintendo is worth $2.29 billion.

For $18 you can buy a share of Nintendo which is like buying partial ownership. This includes partial ownership of brands like Mario, Zelda, DS, and Wii. Partial ownership of their hard assets like factories, offices, and cash. And partial ownership of their debts too.

Nintendo's most recent financial statements showed they had 797.5 Billion Yen worth of cash in the bank. Convert this to dollars and Nintendo has $10.3 billion on hand. Nintendo also owes some money to other people which amounts to $1.8 billion. So Nintendo could pay all their bills and still have $8.5 billion in cash.

With 127 million shares outstanding each share owns $66.80 of Nintendo's cash pile.

So for $18 you can buy ownership of $66 in cash plus get all the Nintendo brands thrown in too.

I'm sure these next few quarters will be tough for Nintendo with declining DS and Wii sales, no Wii U released until 2012, and a loss on the sale of every 3DS, but that is a really huge cash cushion to ride through those hard times.

Full Disclosure: I do NOT own any Nintendo stock.


Anonymous said...

If I had money, I might buy some Nintendo stock right now.

mndrix said...

With numbers like that, do you think Nintendo will be the target of a takeover anytime soon? $2.29 billion is almost pocket change for some companies these days

JJ Hendricks said...

@mndrix - I think Nintendo does stand a good chance of being purchased. With a cash hoard as big as it is and great brands it would be a tempting target.

Nintendo's ex-chairman and CEO, Yamauchi, owns 10% of Nintendo but no other single shareholder owns more than 5% so there isn't really one big shareholder a buyer would have to worry about.

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