Nintendo (OTC: NTDOY) stock jumped early Tuesday, rising 4% by early afternoon trading, compared to a flat result in the wider market, according to data provided by S&P Global Market Intelligence. The boost added to a solid rally for the video game specialist, which has beaten the market over the past full year and is up 11% in 2024 year to date.
The move was sparked by good news on the earnings front.
Good gaming news
Nintendo announced quarterly results before the market opened that revealed solid demand for both its Switch hardware and large portfolio of game titles. Sales are up 8% in the selling period that ran through late December, management said, and operating profit expanded at a robust 13% rate.
These successes were powered by popular title releases that also helped to drive surprisingly strong sales of Nintendo's Switch console. That device is in its seventh year, yet its base of active users is still growing. Nintendo counted 122 million players in 2023, up from 114 million users a year earlier.
That large platform is proving to be a valuable asset in support of Nintendo's game releases. The latest Super Mario Bros title, for example, is approaching 11 million sales just since its late October launch. Executives said they have been thrilled with the reception for Super Mario Bros. Wonder, which has helped its first-party sales levels remain near record highs despite the aging Switch hardware.
Looking ahead
Nintendo has several new first-party releases on the way in the coming weeks, including Mario vs. Donkey Kong. Yet investors were especially pleased with its updated outlook. Nintendo hiked its projected sales and earnings metrics as executives see higher demand for video game software and hardware sales ahead.
Given those improving demand trends, it's no surprise that the stock rose in the wake of this earnings announcement. Nintendo's content-first sales strategy is working well in today's selling environment, giving the company flexibility as it plots out its next big hardware release. Investors are looking forward to that launch, but in the meantime, they're celebrating the company's brightening sales and earnings outlook.
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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Nintendo. The Motley Fool has a disclosure policy.
