All posts by Bradley Moon

Nintendo Profit Is Up Over 500% on Switch Sales — But NTDOY Is Down

Source: Nintendo

Nintendo Ltd/ADR (OTCMKTS:NTDOY) released its annual earning report for 2017 and it included some staggering numbers. Strong Switch sales drove the company’s profit up more than 500% compared to the previous year. And it’s predicting more growth in 2018. In addition, Nintendo announced a new, younger, president will be taking over from the interim leader.

With the huge numbers released and indications the momentum will continue, you might expect Nintendo stock to get a shot in the arm. However, NTDOY is currently down over 3%.

Switch Sales Drive Massive Nintendo Profit Increase

Nintendo released its annual earnings report for the year ending March 31 2018, and the numbers are phenomenal. Especially when you consider the dark place the company was in just a few years back.

For the year, Nintendo generated $9.66 billion in revenue, an increase of 116% compared to 2016. And while that’s an impressive number, earnings are even more so: $1.62 billion on the year, a whopping 505% increase.

Driving that Nintendo profit were Switch sales. The company reported it sold over 15 million of the portable consoles during the year covered, bringing lifetime sales to over 17.79 million units.  Though it was actually on sale for only a month prior to the start of the fiscal year.

To put that in perspective, its previous generation Wii U console sold 13.56 million units during its entire five-year run. Sony Corp (ADR) (NYSE:SNE) is the leader in this generation of game consoles and its Playstation 4 recently hit 76 million units — but it’s been on sale for four and half years. Those strong Switch sales are the reason why Nintendo stock is up nearly 65% on the year and over 300% since the dark days of the struggling Wii U.

A New President and Momentum

The company didn’t just kill it in 2017, it has momentum.

Nintendo is forecasting that it will sell an additional 20 million Switch consoles over the next year. It also has the red hot Nintendo Labo construction sets that are expected to drive additional revenue while helping to keep Switch sales humming. As a result, Nintendo profit for 2018 is predicted to see growth of 26% for 2018.

That’s not as impressive as the 505% growth the company chalked up from 2017 — and that may have something to do with the Nintendo stock dip after the earnings report. But the company is starting 2018 in much stronger place, so triple digit growth isn’t in the cards.

In addition to the impressive Nintendo profit, massive Switch sales and guidance for 2018, the company also announced a new president.

Current president and CEO Tatsumi Kimishima is stepping down, with Shuntaro Furukawa taking his place. The current president was an interim leader, taking the place of the company’s long-term leader Satoru Itawa who died in 2015. Furukawa is 46 and has served on the Nintendo board of directors. He’s seen as a solid choice whose youth will allow consistency in leadership as the company moves out of recovery mode and moves forward.

Bottom Line for Nintendo Stock

Despite today’s dip, Nintendo stock isn’t exactly a bargain at the moment — although it still has plenty of room for upside compared to its 2007 heights.

But based on today’s earnings announcements, Nintendo profit predictions for this coming year, and the strong product lineup from the company, don’t expect it to be a cheap buy any time soon.

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Source: Investor Place

Spotify Technology SA’s First Hardware Release Could Be In-Car Player

Source: Spotify

Several days ago, Spotify Technology SA (NYSE:SPOT) sent an invitation to media for an April 24th event. No clues as to what is on the itinerary, other than a vague “news announcement.”

However, the company had earlier sent some of its customers an offer for an in-car Spotify player –apparently by mistake, as the offers quickly disappeared. Given that hint and Spotify’s rumored interest in hardware, there’s a good chance that the Spotify event will be to announce this device.

Given that SPOT stock just started trading last week, the event coming so soon after could have a significant impact.

Spotify’s Hardware Ambitions

Spotify remains the world’s biggest music streaming service. That position has ensured that most smart speakers — with the notable exception of Apple Inc.’s (NASDAQ:AAPL) HomePod — support the service. Each of these are, in effect, a Spotify player, but they are also one firmware update away from losing that support.

However, the company is clearly not content to rely on third party hardware. In February, job postings revealed that Spotify hardware was in the pipeline. Given the huge growth of the smart speaker market, and the involvement of so many tech companies (many of which also operate their own competing streaming music services), Spotify’s interest wasn’t unexpected.

In-Car Spotify Player Leaked

Another hint about what the company was up to also arrived in February, when a number of Spotify customers received an offer from the company. It showed a round device with an LED ring, several physical controls and it was clearly mounted on a dashboard. An in-car Spotify player.

According to The Verge, the offer of an in-car Spotify player went out to multiple subscribers. And there were variations. For some, the Spotify hardware was offered as part of a $12.99 subscription; for others, it was $14.99 per month. On some, the device offered a cellular connectivity option. Some customers were told it supported Amazon.com, Inc.’s(NASDAQ:AMZN) Alexa voice assistant.

The two things all of these occurrences had in common were that the hardware was clearly an in-car Spotify player, and the offers quickly disappeared.

April 24th Spotify Event

That brings us to the mysterious April 24 Spotify event. What news would the company be releasing that is important enough to justify summoning journalists to New York?

Spotify hardware seems like a safe bet. But the clues from February could be pointing to that in-car Spotify player instead of a smart speaker. And that would make sense from a strategic viewpoint as well. The smart speaker market is huge and growing rapidly, but it is dominated by Amazon. Trying to break in can be risky if everything is not perfect.

Apple’s HomePod is a good example of how your own streaming music service, a big name and quality hardware are no guarantee of making a big splash. Having a Spotify smart speaker debut and possibly flop would not be good news for SPOT stock.

The one place those smart speakers aren’t located, though, is in cars. Spotify listeners spend a lot of time in their cars, and while some newer models may include a system like Apple’s CarPlay, the majority of listeners are probably relying on a smartphone connected to the car stereo using Bluetooth to stream music. There’s an opportunity for Spotify to grab a leadership position by releasing a standalone in-car Spotify player that would let its customers stream music without having to use their smartphones.

It could possibly even boost its subscriber base — especially with those offers that were trialed that added a few dollars to a monthly Spotify subscription instead of requiring a cash outlay. It doesn’t have the same risk as going head-to-head with the mighty Amazon Echo, but could pave the way for doing so later.

We’ll have to wait until April 24 to find out for certain what the company has planned. But an in-car Spotify player seems like a leading contender at this point. And the entry into hardware — especially a market where competition isn’t as fierce as the living room — could have significant upside for SPOT stock.

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Source: Investors Place