Now that it’s clear that there’s real money in the Pokémon Go craze, it’s time to get serious about profiting from Nintendo Co., Ltd (ADR)’s (NTDOY) new augmented reality app. The overwhelming majority of Nintendo shares trade in Tokyo, but if you’re careful, there’s still a way to get a taste of this story.
Before Pokémon Go launched, NTDOY stock was a sleepy and obscure ticker symbol that rarely moved more than 100,000 shares a day. Now, liquidity has improved by a factor of 20-100, which creates its share of challenges as well as opportunities.
On one hand, there’s finally skin in the game here, and a real chance to make money.
On the other hand, the surge of share turnover sweeps away the old status quo, leaving the chart more than a little sloppy and unpredictable.
All this sudden demand for the Pokémon Company has blown out the old technical indicators, which don’t really reflect the new business outlook at all.
How to Play NTDOY Stock
What we have to work with is a chart built on froth and a bit of frenzy, so don’t waste your time chasing shares as they skyrocket. Instead, if you’re accumulating NTDOY for the long term, wait for dips like what we saw last Wednesday, as careful traders may be able to pick up shares in the $25-$30 range as the initial buzz fades.
Whatever happens, don’t get trapped in a stock that you can’t exit. NTDOY stock was that kind of stock for years, and while I’d like to think the Pokémon wave has long legs, it could quickly sour if turnover here hits a wall.
If it becomes clear that the last few weeks have been more of a fad than a sustainable trend, you have two decisions: hang onto this company for the long-term and bank the dividends (currently about $0.13 per year), or let it go entirely.
For a less concentrated piece of the pie, consider any of the exchange-traded funds (ETFs) that have already bought into Nintendo as part of a focus on Asian stocks or global technology.
Nintendo is a relatively small company by Tokyo standards — one reason why NTDOY stock has been so tricky to play on Wall Street — but it’s still a key holding of ETF portfolios like the S&P International Technology Sector SPDR (IPK) and iShares Nikkei 400 (JPXN), which tracks the most globally oriented Japanese stocks.
I also expect incremental bumps in some retailers that offer Poke-themed merchandise, whether it’s kids’ toys, clothing or collectibles.
And since you need at least an iPhone 5 or Galaxy S5 to play, Pokémon Go just gave a lot of fans with sub-par phones reasons to upgrade.
It’s the “killer app” Apple Inc. (AAPL) in particular has been craving to get stubborn consumers to leave the 2012 generation behind, so look for less resistance to coming phone models, too.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
