Nintendo levels up

The Japanese company is back in the game with a new hit console and mobile games. What comes next? Alice Gråhns reports.

The Japanese company is back in the game with a new hit console and mobile games. What comes next? Alice Grhns reports.

"Nintendo has switched on the growth engine," says Jacky Wong in The Wall Street Journal, "now it has to keep it running." The Japanese company behind hit video game franchises such as Super Mario Bros. and The Legend of Zelda reported "blowout results" for the quarter ending on 30 September as revenue almost tripled on a year ago. Driving the beat was Switch, its new game console. Nintendo has already sold 7.6 million units since its launch in March, and now expects to sell 14 million in the year ending 31 March (40% higher than its previous prediction).

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But the follow-up Wii U console sold fewer units over five years than this year's forecast for Switch. It was 2015 before Nintendo broke free from its console-only strategy to pursue mobile gaming too. This "quickly proved successful with the release of titles such as Pokmon Go". Nintendo has now also signed up with third-party producers to make games for Switch, including China's Tencent, the world's biggest game firm, and Rockstar, which developed Grand Theft Auto V, the best-selling game ever.

Now, on a market value of around $45bn, Nintendo trades on nearly 61 times this year's earnings. The firm's huge cash pile helps, but the lofty price reflects optimism that it can make a success of mobile, that Switch will thrive, and that it can turn Mario and other characters into offline money-spinners, says Quentin Webb on Breakingviews. That's a lot of expectation. Yet "the clearer it becomes that Nintendo can deliver on its potential, the less cartoonish the share price gets".

Britain's ten most-hated shares

These are the ten least popular firms in the UK, based on the percentage of stock being shorted (the "short interest"). Short sellers aim to profit from falling prices, so it is useful to see what they're betting against. The list may also indicate stocks that might rebound on unexpectedly good news if short sellers are forced out (a "short squeeze"). Provident Financial, Anglo American and Aggreko are new entries this month. The sub-prime lender recently announced it is rehiring debt-collection agents in an attempt to revive its door-to-door lending operation, which is on course to lose £120m in 2017.

Swipe to scroll horizontally
CompanySectorShort interest on 1 NovShort interest on 1 Oct
CarillionConstruction17.6%24.5%
OcadoSupermarkets16.9%17.5%
DebenhamsGeneral reailer13.1%12.9%
Wm MorrisionSupermarkets12.5%14.7%
Telit CommunicationssTelecoms12.4%13.4%
J SainsburySupermarkets11.3%12.0%
Provident FinancialFinancial service10.9%NEW ENTRY
Marks & SpencerGeneral retailer10.7%10.0%
Anglo AmericanMining9.7%NEW ENTRY
AggrekoPower supplies9.3%NEW ENTRY

Alice grew up in Stockholm and studied at the University of the Arts London, where she gained a first-class BA in Journalism. She has written for several publications in Stockholm and London, and joined MoneyWeek in 2017.