Alberto García M

August 1, 2023

Mario Bros is to Nintendo what Mickey Mouse is to Disney or Bugs Bunny is to Warner Bros.
Passing from generation to generation, we can affirm that any child or young adult clearly
associates the three aforementioned icons as social entertainment symbols.
In the year 2023, specifically in April, the mentioned movie was released practically
worldwide (in America at the beginning of the month and in Asia an average of 3 weeks
later) with high expectations; it even ended up surpassing expectations with a great
acceptance from the audience and critics in general, managing to gross approximately 1.349
billion dollars during the months of April, May, and June, making it the highest-grossing
film of the year so far according to data from the portal

How can this influence Nintendo?

Regardless of the income that the company may generate from the rights granted to
Illumination to use its main characters in the development of the film, it is the marketing
potential that will translate into the sale of their consoles like Nintendo Switch to an
audience that includes children, young people, and adults who have reconsidered
their entertainment options as a result of the movie.

An important pillar of growth and valuation for these companies occurs when a product is
announced; in the specific case of this film, it happens when there is a release or update of a
console, which has not happened since 2021, making this movie the perfect market
presence replacement without having a new product.

How has the stock performed during 2023?

Graph 1. YTD (January 4th to June 30th, 2023) Stock Price Performance.

The stock performed negatively from the beginning of the year until mid-April, and
subsequently, it began a rapid recovery, already achieving an increase of 19.23% by the
end of June.
Coincidence? It seems not; its improved performance is in line with the positive results of
the movie, which may appear as a response from investors with an optimistic expectation for
the benefit of Nintendo.

A week ago (in the comparison with Disney and The Little Mermaid), I mentioned that a
movie cannot be the sole variable determining the value or performance of an entire
company, although Nintendo’s reported results on May 9th were disappointing in
financial terms,
confirming a 22.1% decline in Nintendo Switch sales compared to the same
period in 2022, accompanied by a 14% decrease in their EBITDA.

Based on the previous data, it cannot be explained in fundamental terms why the stock
continued to grow after its financial report… this suggests that the market is considering
future expectations above its present performance.

On its official website, Nintendo mentions the movie’s release as part of its growth strategy
to strengthen its market, confirming positive expectations surrounding it.
It is still too early to determine the impact that Mario’s success had on console and video
game sales, so attention should be paid to their upcoming financial reports to reach a
more objective conclusion regarding the points mentioned in this article.

What can we expect?

The company has not yet confirmed a release date for its new console, which has been
referred to in various portals as Switch 2 or S2, with a probable release date after April 2024.
In my opinion, I would discard the idea that the current market seeks to base its positive
forecast on the expectation of a new product release without further information.

Recently, there has been speculation about a spinoff of the Japanese pride, focusing
on the character of Luigi,
which would seek to replicate the company’s momentum through
an unexplored world and gain market share that its competitors like PlayStation or Xbox do
not have.

For any additional topics related to economics, markets, and personal finances, feel free to
contact me directly through:
LinkedIn: Alberto García Medina
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