Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) Switch sales are hot, and going into the holiday sales period, the company is successfully ramping up production to meet that demand.
As a result, Nintendo’s profit is getting a huge boost. As part of its quarterly earnings report, the company just revised its financial outlook for the year based on the new numbers and it’s big: Nintendo profit is now forecast to be double the original estimate at 120 billion Yen ($1.06 billion).
As you might expect, NTDOY stock is already up on the news.
Nintendo Switch Sales Remain Red Hot
Nintendo’s new hybrid game console was in high demand when it was released at the start of March. However, there’s been a big question about whether the momentum would continue.
After all, the Switch goes for $299, more than Microsoft Corporation’s (NASDAQ:MSFT) Xbox One S bundled with a popular game. Both the Xbox and Sony Corporation’s (NYSE:SNE) PlayStation 4 are more powerful, and they have massive game libraries compared to the Switch.
But the latest numbers show Nintendo Switch sales remain red hot. The NDP Group’s data for September shows Nintendo Switch sales once again made it the top-selling console in the U.S. for that month.
That’s the third straight month the Switch has been on top, and the fifth time in the seven months since its launch. And that lead is despite the fact that Nintendo has been unable to meet Switch demand.
According to the NDP Group’s data, when you throw in the 3DS portable system and the plug-and-play Super NES Classic Edition, Nintendo accounted for two-thirds of all video game hardware sales in the U.S. for September.
Worldwide, Nintendo Switch sales for the past quarter were 2.9 million. The company’s projections are for 14 million units sold in its first year on the market, more than the Wii U sold in its five-year lifetime.
Manufacturing Capacity Is Catching Up
The Switch was already a good news story for NTDOY stock, but making things even better is the fact that Nintendo is having increased success in getting consoles onto shelves. Retailers like Best Buy (NYSE:BBY) now frequently have Switch consoles in stock, after months of shortages.
Nintendo isn’t making any promises going into the console’s first holiday season, but it looks like supply will be there for Nintendo Switch sales to grow even further.
Game Sales Are Also Strong
In the company’s latest quarterly earnings report, Nintendo Switch sales weren’t the only good news. Nintendo is also on track to sell more games than expected: 50 million for the year, compared to the 35 million it was originally looking at.
On top of the games for its consoles, Nintendo is also launching Animal Crossing: Pocket Camp for iOS and Android in November. This highly anticipated mobile game is likely to be the next Super Mario Run in terms of popularity.
Nintendo Profit Estimate Doubles
Put all the good news together –strong Nintendo Switch sales, improving Switch supply, increased demand for games and continued success in mobile– and Nintendo is expecting to have a banner year. The company released new guidance, doubling its annual profit forecast to 120 billion Yen ($1.06 billion).
Compare the current situation to the past several years. The Wii U was tanking, and mobile games played on smartphones were threatening to strangle its portable gaming sales. Thanks to a revised mobile strategy and those Nintendo Switch sales, the prospects for NTDOY stock haven’t looked this good in a long time.
In April, Nintendo’s earnings were expected to be its highest in seven years. And now its profit forecast has doubled from those already impressive numbers.
Microsoft does have the new Xbox One X launching in November, but it seems unlikely that the super-powered, $499+ console is going to eat into Nintendo Switch sales. So look for Nintendo — and NTDOY stock investors — to have their best Christmas in a long time.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
