Podcast Summary: Motley Fool Money – "Nintendo’s Big Release"

Episode Details

• Title: Nintendo’s Big Release
• Host/Author: The Motley Fool
• Hosts: Mary Long and Jason Moser
• Release Date: June 5, 2025

Introduction

In this episode of Motley Fool Money, hosts Mary Long and Jason Moser delve into the highly anticipated launch of Nintendo's much-awaited Switch 2 console. The discussion expands to encompass the broader gaming industry and shifts to analyze the recent earnings report of discount retailer Five Below. With insightful analysis and engaging dialogue, the hosts provide listeners with a comprehensive overview of current market dynamics affecting these prominent companies.

Nintendo Switch 2 Launch

Mary Long opens the conversation by highlighting Nintendo's significant milestone—the launch of the Switch 2 console. She underscores the original Switch's success, noting its impressive sales of 152 million units since its debut in March 2017, positioning it as the third most sold gaming console of all time, trailing only the PS2 and Nintendo DS.

Mary Long states, “Nintendo thinks it can sell 15 million units of the Switch 2 by the end of its fiscal year that ends in March 2026” (01:00). Despite this optimistic outlook, she mentions that analysts consider this projection conservative, especially given the original Switch's remarkable market performance.

Jason Moser concurs, emphasizing the potential of the Switch 2. He draws parallels to Apple's product launches, highlighting the fervent consumer demand comparable to Apple's new device releases. “This device definitely has that same sort of level of demand” (03:09), Moser remarks, predicting strong sales momentum, particularly during the holiday season.

The hosts discuss the pricing strategy, noting that the Switch 2 is set to retail at approximately $450. Mary Long suggests that despite the higher price point, the console’s fun factor, especially with titles like Mario Kart, could justify the investment for consumers (02:25). Moser adds, “Consumers can be a bit irrational at times. They're going to buy what they really want to buy” (03:09), indicating strong market resilience.

Market Position and Strategy

Mary Long points out that despite Nintendo’s stock experiencing volatility since 2020, the impending Switch 2 launch has rekindled positive investor sentiment. Jason Moser likens Nintendo’s business model to that of Disney's movie division, emphasizing its reliance on hit-driven products. “The market gives it a little bit of credit and kind of looks past the lumpiness of that business” (05:36), he explains, noting the value of Nintendo’s extensive intellectual property (IP).

The conversation shifts to Nintendo’s strategic shift towards iterating on the Switch platform rather than introducing entirely new consoles. Moser likens this approach to Apple’s continuous iteration of the iPhone, suggesting it’s a smart move given the established consumer demand and the aging technology of the original Switch (08:14). He anticipates that this strategy will sustain Nintendo’s market presence and pave the way for future iterations, such as a potential Switch 3 within the next five to seven years.

Comparison with Competitors

Mary Long contrasts Nintendo with other major players in the gaming industry, namely Sony and Microsoft. She highlights Nintendo’s unique position, relying heavily on homegrown IP exclusive to its platforms, unlike Sony and Microsoft, which depend more on third-party developers (09:53).

When asked which gaming company he would choose to invest in, Jason Moser expresses a preference for Microsoft due to its diversified portfolio and recent strategic acquisitions, including Activision Blizzard. However, he acknowledges Nintendo’s strength in its proprietary IP, which provides a significant competitive advantage and allows for greater control over its content ecosystem (10:32).

Five Below First Quarter Earnings

Transitioning from gaming, Mary Long introduces the topic of Five Below’s first-quarter earnings report. Despite Nintendo-themed humor regarding the inability to purchase the Switch 2 at Five Below, the hosts analyze the retailer’s impressive financial performance.

Five Below reported a 20% increase in revenue, a 7% rise in same-store sales, and a profit surge to $41.5 million, up from $31.5 million the previous year. Additionally, the company expanded its footprint by opening 55 new stores last quarter. Mary Long highlights management’s optimistic outlook, anticipating continued sales growth and further store expansions (12:32).

Jason Moser echoes this sentiment, expressing admiration for the company's robust top-line growth and positive comparable sales figures. He notes, “There was just a lot that stood out and it felt like it was all really positive” (13:13), emphasizing the comprehensive strength of the earnings report.

Impact of Tariffs and Economic Considerations

The discussion turns to the challenges posed by tariffs. Mary Long provides context on the current tariff landscape, explaining that while reciprocal tariffs are paused, a 10% base tariff on all imported goods and a 125% tariff on goods from China remain. Five Below faces the dilemma of absorbing these tariffs to preserve its value proposition, potentially squeezing margins.

Jason Moser critiques the company's guidance, which projects only a 200 basis point decline in operating margins despite significant tariff pressures. He suggests this may be overly optimistic but acknowledges Five Below’s strategies to mitigate these impacts, such as diversifying supply chains and increasing store traffic (16:06). Moser underscores the importance of consistent store traffic and comparable sales growth as essential buffers against rising costs.

Leadership and Future Outlook

Mary Long brings attention to Five Below’s new CEO, Winnie Park, who has been at the helm for seven months. Under her leadership, the company has navigated through a period of stock recovery following a downturn after disappointing results a year prior. Despite underperforming the S&P 500 over the past five years—up 23% compared to the index’s near doubling—Five Below shows signs of resurgence.

Jason Moser outlines key success factors for Park and Five Below: managing current economic challenges, continuing to drive store traffic, and further diversifying supply chains to reduce dependence on China. He commends Park’s proactive measures, such as reducing goods sourced from China by about 10 percentage points, indicating a strategic pivot to enhance long-term resilience (18:29).

Conclusion

In this episode of Motley Fool Money, Mary Long and Jason Moser provide an in-depth analysis of Nintendo’s Switch 2 launch and its implications for the company’s future, juxtaposed with Five Below’s encouraging earnings report amid economic headwinds. The discussion encapsulates the dynamic interplay between product innovation, market strategy, and external economic factors, offering listeners valuable insights into two distinct yet influential sectors.

Notable Quotes

• Mary Long: “Nintendo thinks it can sell 15 million units of the Switch 2 by the end of its fiscal year that ends in March 2026.” (01:00)

• Jason Moser: “Consumers can be a bit irrational at times. They're going to buy what they really want to buy.” (03:09)

• Jason Moser: “The market gives it a little bit of credit and kind of looks past the lumpiness of that business.” (05:36)

• Jason Moser: “There was just a lot that stood out and it felt like it was all really positive.” (13:13)

• Mary Long: “No one else, not even us. WhatsApp message privately with everyone.” (00:01)

This summary captures the essence of the podcast episode, providing a structured and detailed overview of the key discussions on Nintendo’s new console release and Five Below’s financial performance, enriched with notable quotes and timestamps for reference.