Nintendo a $100B Company

Nintendo (OTCBB: NTDOY) gets very little credit for its potential net worth. Though the stock is nearly double from the levels of its 52-week lows, the company could be worth double or more in the years to come. Strong demand for Nintendo’s SNES Classic is one data point that would justify this view.

SNES Classic Edition sold out online and in stores in just days after its release. The insatiable demand for Nintendo’s well-known games suggests the market is under-valuing the company’s IP value. SNES Classic will not be replenished in stores until the holiday season.

Fundamentally, Nintendo’s fortunes are improving rapidly. The company launched Switch with much success. Demand for the handheld gaming system continues to hold up. Further, the product has a moat over the competition. Smartphone games cannot match the power and immersive games on the Switch device.

Nintendo continues to release blockbuster game titles for the Switch. As the user base for Switch grows over time, each successive release of games on the platform will lead to higher sales. At a market cap of just $44 billion, Nintendo’s stock has upside potential. Electronic Arts (NASDAQ: EA) has a market cap of $36.4 billion. Activision’s (NASDAQ: ATVI) market cap is $48.7 billion. Yet Nintendo has both software and hardware and a deep library of games. It just needs to monetize the classic games.