NTDOY Update – Re: 3DS

August 16, 2010

On April 19th in our first post ANT promoted a long thesis on Nintendo (through the ADR’s, NTDOY).  At the time the shares were trading at $38.50.

Today the shares are trading at $32.86 (down 15%).  ANT is ready to review the events of past 4 months.

The Nintendo thesis was largely premised April being approximately the bottom of hte console refresh cycle (i.e. before anything new to supercede the DS and Wii had been shown to the public).  At that point the 3DS had been announced but not demoed (the announcement was vague).

On June 15 (as expected) Nintendo demoed the 3DS at E3.  The new handheld recieved rave reviews from the press and blogsphere. 

In the few months leading up the E3 (i.e. April to mid-June), the shares fell about 23%.   In the days following E3 the shares rallied strongly off the bottom and gained 18%.  This was the basis of our thesis to begin but the share price fall in the period between purchase and E3 made this post-E3 bounce largely irrelevant is it simply returned us to cost.  Since the post-E3 bounce ended the shares have been falling steadily and now sit at ~$33 (down 15% from post-E3 peak), which is the lowest they have been since ANT bought in.   Nintendo will announce the 3DS release date in September.  ANT does not expect an 3DS bounce until the product comes out and demonstrates it can sell (analysts will be looking at it sales stats relative to the DS and also relative the iPhone/Touch/iPad.  ANT will continue to hold the shares (we recieved a nice dividend recently) until the initial sales figures come in.

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