Chit Chat Stocks Podcast Summary

Episode: Is Nintendo Stock Dirt Cheap Today? With Leandro From Best Anchor Stocks (Ticker: NTDOY)
Hosts: Ryan Henderson & Brett Shafer
Guest: Leandro, Best Anchor Stocks
Date: March 4, 2026

Episode Overview

In this episode, Ryan and Brett welcome back Leandro from Best Anchor Stocks for an in-depth look at Nintendo’s current business landscape, the recent stock decline, Switch 2 launch dynamics, lasting IP monetization, financials, and prospects for capital return. The conversation weaves through hardware and software strategy, memory chip risks, non-gaming growth opportunities (movies/theme parks), and the critical question: is Nintendo undervalued after its stock dip?

Nintendo’s Transition: The Switch 2 Era

[01:56]

• Leandro sees Nintendo at an “unprecedented...uncharted territory” with the transition from Switch to Switch 2, the company’s first true generational continuation.
• Historically, each Nintendo console reset the business cycle, but the Switch 2 signals a "break" with this hit-driven, start-stop model.
  • “It’s a very interesting moment in Nintendo’s history...every investor was asking for this continuation and now it’s happened.” — Leandro [02:38]
• Despite this progress, the stock has plummeted from $25 to below $15.

Why Has Nintendo Stock Fallen So Much?

[03:39]

• Current hardware margins: The Switch 2 launch featured a weak 1st-party software lineup, so a higher proportion of lower-margin hardware sales hurt profits.
• Future margin fears: Memory chip shortages, with cost spikes due to AI, may increase Switch 2’s bill of materials and pressure hardware margins.
  • “Probably the most significant...would be the one related to memory chip costs.” — Leandro [05:20]
• Competition narrative: Sony’s PS5 outsold Switch (with deep discounts) over Black Friday, sparking misplaced comparisons.
• Valuation reset: The prior peak ($24–25/share) wasn’t wildly overvalued, but did allow for a correction.
  • “Even though Nintendo was not super expensive at $24, $25, it wasn’t super cheap to start with.” — Leandro [05:54]

Memory Chips & Margins: Risks and Market Overreaction

[06:33]

• Nintendo secured long-term supplier agreements for memory chips, buffered inventory, and can weather at least a year—even if memory prices stay high.
  • “They built a lot of inventory. And...management has anticipated to an extent the shortage. So I’m not worried about the chip shortage.” — Leandro [08:11]
• The worst scenario (not enough chips to produce consoles) is unlikely.
• Long-term view: Hardware margin compression is temporary; the real profits will come from software over the multi-year cycle.
  • “Over the long term it’s going to be software that drives the profits.” — Leandro [09:21]

Inventory and Launch Strategy

[11:37]

• Nintendo preemptively stocked up.“From the launch of the Switch 1, Nintendo had stocked 3 billion yen of raw materials. For the launch of the Switch 2, they had stocked 179 billion yen. So it’s 60 times more.” — Leandro [12:22]
• This proactive inventory build is a key risk control for memory shortages and hardware demand.

Software Lineup: Weak Now, Powerful Later?

[13:44]

• Consumer view: Disappointment with weak 1st-party line-up at launch.
• Investor lens: Selling 19 million consoles without strong new first-party software signals pent-up demand; the “best” games (e.g., new Mario, Zelda) are yet to drop.
• Nintendo is deliberately pacing big releases, holding marquee titles (Mario, Zelda) for future years to stretch the install base and avoid bottlenecking demand into Year 1.
  • “If you know you’re going to sell pretty much all of your supply, why would you exploit...your best selling points, which is software, to sell hardware?” — Leandro [15:36]
• Bulk of software margin and excitement will hit in Years 2 and 3.

Non-Gaming Expansion: Movies, Theme Parks & The Entertainment Flywheel

[22:17]

• Nintendo is “much more open to monetizing and utilizing its IP” — using movies, theme parks, and TV to drive both direct revenue and serve as high-ROI marketing for game/software sales.
  • "Nintendo is one of the few companies that gets paid to do marketing." — Leandro [23:37]
• Upcoming annual movie slate: Mario this year, Zelda next, with further franchises likely.
• Added touchpoints build cross-generational fandom and help convert new audiences via other media.
• Concerns about overexploiting IP are refuted: franchises are rotated, not overused year after year, balancing exposure with scarcity.
  • “If the results were good on a seven year old cycle, what are the results going to be on a newly launched console and maybe a newly launched game?” — Leandro [25:23]

Capital Allocation & Buybacks: Cash Hoarding Coming to an End?

[34:09]

• Nintendo holds ~25% of market cap in cash ($14–15B), with strong future cash flows expected.
• Leandro predicts “significant buybacks eventually.”
  • “I wish and I think that we’re going to see buybacks eventually for Nintendo. I don’t know when. Now would be an exceptional moment.” — Leandro [35:03]
• Nintendo is already more open to increasing dividends and did small buybacks in the past — could signal future, larger returns.
• Japanese caution remains, but generational management is proving less conservative than before.

Tariff & Macro Risks

[40:46]

• Tariff concerns (especially US/China trade) are seen as manageable, similar to memory costs.
  • Nintendo has diversified manufacturing, holds large inventory, and can offset risks by pushing digital (higher-margin) games.
  • “Video games are probably together with music, the cheapest form of entertainment.” — Leandro [42:14]

Competing With Roblox & New Gaming Trends

[45:16]

• Roblox is a growing cultural force for children, raising fears about Nintendo’s generational stickiness.
• Leandro’s take: Roblox is complementary, not necessarily competitive; Nintendo continues to build inter-generational ties and loyalty unmatched by new platforms.
  • “It’s very tough to get an intergenerational connection with Roblox, mainly because the parents of a lot of these kids have never played.” — Leandro [47:06]
• Historical “Nintendo killer” narratives (PlayStation, mobile, etc.) have failed; Nintendo’s approach is less reactive and focused on delivering unique experiences.

Earnings Durability & Valuation

[51:49]

• With the Switch 2's success and recurring IP monetization, Nintendo is entering a more stable, durable earnings era.
  • “Earnings are much more durable just for the reason that software eventually makes up a much more significant proportion of sales because you’re selling more software to a larger installed base and that helps protect the bottom line.” — Leandro [52:04]
• Valuation is relatively low: ~20x current EBIT on enterprise value, at the start of a new hardware cycle, and not factoring in full margin expansion.
  • “There’s a lot of value in the IP, right? So I’m not concerned about earnings durability...” — Leandro [53:50]

Biggest Misunderstanding About Nintendo

[54:26]

• The market often treats Nintendo as more discretionary/cyclical than it is; in fact, its fundamentals and fan base have proven resilient and loyal through downturns.
  • “Nintendo had its first loss after 30 years. I think that speaks to a pretty resilient business.” — Leandro [56:10]
• Nintendo excels at pacing IP monetization for lasting franchise strength instead of extracting maximum short-term profits.

Notable Quotes

• “Over the long term it’s going to be software that drives the profits.” — Leandro [09:21]
• "Nintendo is one of the few companies that gets paid to do marketing." — Leandro [23:37]
• “If the results were good on a seven year old cycle, what are the results going to be on a newly launched console and maybe a newly launched game?” — Leandro [25:23]
• “It’s very tough to get an intergenerational connection with Roblox, mainly because the parents of a lot of these kids have never played.” — Leandro [47:06]
• “Nintendo had its first loss after 30 years. I think that speaks to a pretty resilient business.” — Leandro [56:10]

Important Timestamps

• [01:56] — Leandro’s update on Nintendo’s business and the Switch 2 transition
• [03:39] — Breakdown of Nintendo’s stock decline and margin issues
• [06:33] — Memory chip cost pressures & risk mitigation
• [13:44] — Discussion of Nintendo’s software strategy and lineup
• [22:17] — Non-gaming expansion (movies, theme parks, entertainment flywheel)
• [34:09] — Discussion on Nintendo’s cash hoard and potential buybacks/dividends
• [40:46] — Addressing tariffs and macroeconomic threats
• [45:16] — The Roblox question: generational risk and audience trends
• [51:49] — Earnings durability and valuation context
• [54:26] — What investors most commonly misunderstand about Nintendo

Conclusion

This episode delivers a comprehensive, long-term investor lens on Nintendo’s business, blending near-term launch and margin issues with enthusiasm for its IP, strategic software pacing, and new entertainment ventures. Despite today’s stock pessimism, Nintendo’s multi-layered profit streams, enduring fan base, and cultural reach suggest more “durable” earnings—and potentially underappreciated upside as the Switch 2 and non-gaming flywheels gain momentum.

For deeper company dives, check out Leandro’s work at Best Anchor Stocks.