Nintendo (NTDOY) announces new $300 million share buy back

Nintendo announced a new share repurchase program today in Japan. Find out more about the $300 million buy back.

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Nintendo has a history of returning cash to shareholders. This mainly occurs through dividend payments, but today the company's board of directors has authorized a $300 million share repurchase program. The buy back authorizes up to one million shares to be bought. This decision from the board of directors comes less than a day after Nintendo shares spiked during U.S. trading. 

Nintendo's ADR stock (NTDOY) jumped on higher usual volume before news of the share buyback broke. Coincidence?
Nintendo's ADR stock (NTDOY) jumped on higher usual volume before news of the share buyback broke. Coincidence?

I alerted Shacknews readers about this spike in Nintendo's stock on unusually high volume earlier in the day. Over $10 million worth of Nintendo (NTDOY) shares traded in a fifteen minute period. This amount is certainly dwarfed by Nintendo's $300 million buyback which will take place between March and April. The company will be buying these shares on the Tokyo Stock Exchange. This repurchase program could potentially shrink the outstanding shares by 0.83%.

Nintendo also announced that they will be cancelling 10 million shares of treasury stock. This reduces the number of shares outstanding to 131,669,000 after cancellation. The majority of these shares were bought from the estate of Hiroshi Yamauchi at a much lower price than the stock trades today. 

Nintendo has had a very interesting day with the retirement of Nintendo of America President Reggie Fils-Aime sending shockwaves across the gaming world. The company finds itself in solid financial shape, and is putting their money where their mouth is. Clearly the board of directors sees value in Nintendo's stock, and this buy back comes at a time where the stock finds itself down over $20/share from its 2018 trading high. 

One does have to wonder if the set of trades that occurred during U.S. trading were the restult of insider trading, but either way Nintendo's board is finally stepping up and making their voices heard that they believe the stock is worth buying at these current levels. Buy backs do not always work, but Nintendo has shown the ability to execute these returns of capital to shareholders in a very opportunistic manner. 


Full Disclosure:

At the time of this article, Asif A. Khan, his family members, and his company Virtue LLC had the following positions:

Long Nintendo via NTDOY shares

CEO

Asif Khan is the CEO and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.

From The Chatty
  • reply
    February 22, 2019 1:05 AM

    Asif Khan posted a new article, Nintendo (NTDOY) announces new $300 million share buy back

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      February 22, 2019 6:36 AM

      IMO they should have dropped the price of their first party games and increased sales instead. Would probably have a bigger impact on their stock to move more units.

      PS4 has tons of really good sales and while its good that Nintendo finally has them too, they usually don’t impact their own games. I have 3-4 games on my wish list but hesitate at 80$ (CDN) each. Especially when two of them are ports (Mario and Donkey Kong).

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        February 22, 2019 6:55 AM

        I'm betting DK will be on sale this year sometime, NSMB probably will be around when SMM2 comes out since it'll no longer be the only 2d Mario game (and the latter comes with infinite levels, albeit very varying degrees of quality).

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        February 22, 2019 8:08 AM

        Why drop prices when their customers will loyally buy the games at full price?

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        February 22, 2019 8:29 AM

        switch has great attach rates and something like a 50% rate for mario kart and botw. they are selling tons of units and don't really have much incentive to lower prices.

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          February 22, 2019 8:30 AM

          Still, they didn't hit their projections, so that could be incentive for a price drop/cheaper sku.

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      February 22, 2019 6:38 AM

      :O

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      February 22, 2019 6:42 AM

      The window is still open EggYelllow, lower that basis quick!

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        February 22, 2019 7:49 AM

        I’m so dumb I don’t even know if this is good or bad!

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      February 22, 2019 6:53 AM

      Hoooooooooooooooooooooly crap.

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      February 22, 2019 7:00 AM

      Good for shareholders, but you’d think that money could be spent on R&D and create long-term value instead.

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        February 22, 2019 8:24 AM

        Part of me wonders if they did this in part to counter sales on the news that Reggie was stepping down.

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        February 22, 2019 8:30 AM

        https://imgflip.com/i/2uctp5

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        February 22, 2019 9:03 AM

        We are probably past the break-even point for all the R&D, game dev, and marketing costs leading up to the launch of the Switch. This is the middle-age of the Switch, where Nintendo can really reap the their profits before they have to crouch down again for whatever the next Nintendo hardware is.

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      February 22, 2019 8:41 AM

      Okay, THAT'S PRETTY SUSPECT.

      Either there's a leak in that board room or Nintendo has a c-level executive that is doing some shady shit.

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        February 22, 2019 10:54 AM

        funny thing is the stock didn’t move until like an hour ago. Anyone could’ve tried to make money on this

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          February 22, 2019 11:01 AM

          It moved up 4% one hour before Reggie’s departure was announced and 13 hours before the buyback was announced...