Why Nintendo Shares Hit A 52-Week High Friday

Shares of Nintendo Co., Ltd. NTDOY hit a new 52-week high of $68.27 Friday.

Shares are now up 29% in 2020 as the gaming company continues to be a pure play on the growth of video games during stay-at-home orders. Sales of Nintendo Switch devices and games have been strong for the company.

What You Need to Know: Nintendo continues to be a leader in video game industry hardware and software sales.

NPD Group reported that video game sales were up 32% in July, coming in at $3.59 billion. This follows up a recent string of strong months in April (+73%), May (+52%) and June (+26%).

Year-to-date, video game industry sales are up 21% to $26.05 billion.

Nintendo led the way in July hardware sales.

Overall, the hardware market was down 2% to $166 million in July.

Nintendo also dominated the software rankings with the new release "Paper Mario: The Origami King" placing third for the month and returnees "Animal Crossing: New Horizons," "Ring Fit Adventures," "Mario Kart 8 Deluxe" and "Super Smash Bros.: Ultimate" all ranking in the top 10 for sales.

Nintendo’s first-quarter earnings Aug. 6 highlighted the company's strong  sales.

Net sales for the first quarter ending June 30 increased 108%. The company’s profit increased 576% for the quarter.

Why It’s Important: Nintendo has been strong in 2020. Nintendo sold 5.68 million Nintendo Switch consoles in the first quarter.

More than 61 million Switches have been sold since the device made its debut in 2017. 

The company has shown that its key franchises remain strong. The newest release in the "Animal Crossing" franchise sold 10.63 million copies in the first quarter and has now sold 22.4 million copies through the first half of 2020.

The report from NPD Group shows that Mario games continue to sell well for Nintendo.

The first quarter saw the release of add-on content for "Pokemon Sword" and "Pokemon Shield" called "The Isle of Armor."

This release helped the company increase digital sales by 230%. Nintendo is planning another add-on pack for Pokemon in the fall.

Nintendo issued full-year forecast back in May. The company guided to total revenue falling 8.3% year-over-year

Profit for the full year is seen coming in 19.5% lower than the previous year.

This quarter from Nintendo was very strong on a year-over-year basis. Another strong quarter could lead the company to increase its full-year guidance.

What’s Next: Nintendo is expecting to sell 19 million Switches in the current fiscal year.

Two new console releases are expected later this year from Sony Corporation SNE and Microsoft Corporation MSFT.

These new consoles will put pressure on Nintendo’s dominance in the hardware market.

Nintendo can continue to rely on its strong brands like Mario, Pokemon, and Animal Crossing, which are exclusive to its consoles.

NTDOY Price Action: Nintendo shares were trading 5.75% higher at $68.01 at last check Monday.