Shacknews - Asif Khan

Nintendo's stock dropped 17% overnight in Japan on news that the company had already factored in the impact from the success of Pokemon Go into their earnings forecast. Many investors remain confused by the continued volatility in the company's share price. I believe there are a number of factors behind it.

Nintendo trades on the U.S. Stock Market's Pink Sheets under the symbol NTDOY. The stock had been trading an average daily volume between 20,000 and 50,000 shares for most of the year until July 7th, when it traded 900,000 shares closing the trading day at $18.81/share. The next day, 792,000 shares traded hands and the share price closed the week at $20.73. Shareholders had already witnessed a 17.5% return in two days from the hype of Pokemon Go.

I mentioned in an article that day that while the initial jump in share price may have left some investors feeling like they had missed the boat, it could very well be the tip of the iceberg. NTDOY opened at $29/share the next Monday, after a weekend of Pokemon GO sweeping the nation. The trading volume on July 11th was simply staggering. 9.8 million shares traded hands as the stock closed above $30/share for the first time in years. Trading volume had increased 52,000% from 10 days prior! This is not something that investors should gloss over as volume can provide some guidance as to where money is flowing. Large funds were buying shares of Nintendo all day at 20,000 share block orders and higher. This was a combination of short covering (buying back shares that had previously been borrowed and sold) and institutions not wanting to miss out on Pokemania. FOMO, or fear of missing out, is a phenomenon seen too often on Wall Street and can lead to parabolic movements in share price.

The denouement of the ensuing parabolic move in NTDOY occurred on Monday, July 18th. The stock traded 13.3 million shares, hitting an intraday 52 week high of $38.25/share. It seemed that buyers had capitulated driving NTDOY to a 117% gain for shareholders in a 12 day period. These kinds of stock moves are rarely met without profit taking.

Fibonacci Retracement

Today's sell off retraces NTDOY's parabolic move to $38.25/share from $17.63/share by almost exactly 61.8%. That number is no coincidence as it is called a Fibonacci retracement (based on the Golden Rule found in nature) that stock market technicians use to gauge share price movements. This is all fine and dandy, but many folks view this type of analysis as mumbo jumbo. Yes, NTDOY was overbought on technical indicators at its recent high of $38.25/share, but could the market be so wrong that the share price has dropped $13 from its recent high?

It is my opinion that the market misintrepreted Pokemon Go's sucess from the beginning. I wrote previously about how much Nintendo could make from the app, but it seems like many investors were unaware or blinded by the fear of missing out. I concluded that the perception in the stock market was that Pokemon Go is a hit and Nintendo is the best pure play to get exposure. It seemed like a huge stretch for an app that could potentially yield an additional $300 million in revenues could increase a company's valuation by $20 Billion in such a short period of time. The explosion in share price to the upside was fueled by the fact that the stock is rather thinly traded, being a pink sheet ADR. That same illiquidity has helped and hurt Nintendo shareholders in the past. 

In March of 2015, NTDOY spiked from $14.29/share to $24.50/share in a 2 day period on the news that Nintendo would enter the smartphone app market. 6.4 million shares traded over a 2 day period and that share price rally ultimately failed with NTDOY only surpassing its March 2015 highs later that year in August.

Longer Term Resistance

Oddly enough, NTDOY closed very close to its 2015 high of $25.71/share today. Stock market technicians, or chartists, like to say that past resistance becomes future support and that past support can become future resistance. It will be interesting to see if NTDOY can hold this level around $25.71/share in the coming days and weeks. 

Resistance

This sell off shouldn't come as much of a surprise to long term shareholders of NTDOY. Investors who have owned this stock since the beginning of 2011 finally reached a breakeven point last week. There is a pervasive mentality when investors break even on a stock that has been a long term loser that they thank their lucky stars and get out. This is yet another reason that could explain why NTDOY has sold off in recent days. 

An additional factor that many investors fail to notice about NTDOY is that there are no options that trade alongside the shares. This means that the only way for investors to protect their gains in the stock is to sell. The lack of put options makes it impossible to hedge your long bet in Nintendo, so the easiest course of action is to sell. This has been an impediment to institutional ownership of NTDOY for quite some time and I can personally attest to some of my former clients avoiding the stock for the sheer reason that it doesn't trade with any options.

These are some of the reasons why I believe Nintendo's stock is moving so violently. It seems like the question on everyone's mind is what should you do now with Nintendo's stock? First of all, I believe Nintendo deserves some praise for clarifying the impact of Pokemon Go. It is a refreshing level of honesty from management and has removed some of the froth from the stock. I believed Nintendo was undervalued earlier this month when it traded $17.63/share.

I also thought that the stock had got ahead of itself when it eclipsed $38/share just last week. Now that we have witnessed some consolidation of the move, I believe investors can begin to wade back into the shares. I would note that Nintendo reports their earnings after the market close on Wednesday in Japan, and it may be prudent to wait until after management has had a chance to disclose all their financial results before buying more shares. At the end of the day, I believe that a new bull market has begun in Nintendo.

The market is begging to reward the Big N for its 3rd party efforts on mobile platforms. We saw this in March of 2015 and again just this month. Clearly, some investors believe that Nintendo's software business is much more valuable when they make their intellectual property available on as many devices as possible. I believe that this tiered approach will prove to increase the halo around all of Nintendo's properties. 

For the first time in many years, Nintendo has tailwinds that are pushing them in the right direction. Bringing their content to amusement parks, television and film will only add to their bottom line. This new strategy, implemented by the late Satoru Iwata, is just getting started and I believe NTDOY offers long term upside of 100% or more to patient investors willing to navigate some bumpy waters.

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 ADR

Shacknews - David Craddock

Operation Skull Rain, the next expansion for Rainbow Six Siege, drops next Tuesday, and Ubisoft published a blog running down details on content and features.

As with previous expansions such as Operation Dust Line, Operation Skull Rain will get you two new operators and one map designed around team-based action. "Set in a Brazilian favela, this new map supports exterior shell destruction, making it Rainbow Six Siege’s most destructible map to date. The new map will be free for all players."

Rainbow Six Siege's two new operators hail from Brazil’s Batalhão de Operações Policiais Especiais (BOPE). Caveira specializes in defensive tactics as evidenced by her Silent Step, a skill that allows her to sidle up behind enemies and interrogate them to get information. Her compatriot, Capitão, favors offense; he packs a crossbow loaded with bolts capable of draining oxygen with a set radius, as well as several types of grenades.

Season Pass holders will get exclusive access to Caveira and Capitão for the first seven days of Operation Skull Rain's availability. After the timed exclusive times out, they'll be available for purchase by one and all.

Rainbow Six Siege: Operation Skull Rain goes live on August 2, next Tuesday, for Xbox One, PS4, and PC.

Shacknews - David Craddock

Already out in Japan, Mobius Final Fantasy drops in the US on August 3, and Square pushed out a teaser to show off some of the game's technical and creative features.

Square purports that Mobius Final Fantasy exhibits "console-quality HD visuals." Hey, it's no Final Fantasy 15, but those character models and detailed backgrounds could hold their own against the best of the best from other recent installments.

A side entry in Final Fantasy lore, Mobius nevertheless boasts a panoply of gameplay systems deeper than many mobile RPGs, and it's made by the core FF team to boot.

If you're interested in playing, consider pre-registering: Square is teasing additional in-game rewards—along the lines of elixirs, crystals, and Summon Tickets—if more than 150,000 users sign up. It hit the number recently, so anyone who registers can reap the benefits.

Shacknews - David Craddock

A recent change in Xbox Live's Terms of Use dictates that you have to log in to Xbox Live at least once every five years if you want to keep your gamertag.

The report comes from editors over at WCCF Tech (via GameSpot), who discuss the language used in the new clause. "You must sign into Xbox Services at least once in a five-year period, otherwise you may lose access to the gamertag associated with your account and that gamertag may become available for use by others."

Microsoft has been doubling down on freeing up stagnant gamertags and releasing them back into the wild. It released some back in 2011, and freed up one million more earlier this year. To be fair, if you haven't used your Xbox Live account in five years, you were pretty much done with it, right?

This is one in a line of changes Microsoft has made to its online gaming network in recent months. Back in May, the Xbox manufacturer made some adjustments to Xbox Live's subscription price in select territories. More notably, it began encouraging cross-platform play between Xbox One games and their PC and PlayStation 4 counterparts.

Shacknews - David Craddock

Console manufacturers choose some oddball names for their hardware. Nintendo Wii, Sega Dreamcast, Microsoft Xbox. Only in hindsight do these names become normal to our eyes and ears. Manufacturers put a lot of thought into names, though, and christening the successor to Microsoft's original Xbox received more thought than most.

In a recent interview with IGN (via GameSpot), ex-chief Xbox officer Robbie Bach admitted that Microsoft toyed with the notion of branding its second console "Xbox 3."

What? No Xbox 2?

It makes sense when you think about it. Microsoft threw its hat into the console arena one generation after PlayStation 2. Knowing that its second platform would be going head to head against Sony's PS3, no one from the Xbox division wanted consumers to get the idea that their platform was somehow inferior or behind the curve just because it had a "2" in the title.

"Certainly Xbox 3 was actually on the list because, well, you've gotta catch up," Bach said. "You don't want to be Xbox 2 compared to PlayStation 3. We actually talked about that... You don't want to feel like you're a generation behind, so why not skip?"

Bach pointed out that jumping from Xbox 1 straight to 3 didn't seem like a big deal at the time. After all, Microsoft has a history of nonlinear naming conventions: Microsoft 3.1 to Microsoft Windows 95, Windows 98 to ME, Windows 8 to Windows 10—a decision stemming from concerns that older programs would malfunction due to legacy code running checks for text strings beginning with "Windows 9"—and of course, Xbox One.

Ultimately, Microsoft decided to go with Xbox 360. Bach and the others made the right call. Microsoft positioned the Xbox 360 as games console as well as an all-around media center for the living room, and still managed to get "3" in the branding. Win-win.

Shacknews - David Craddock

Gears of War 4 has already gained renown as the first Microsoft-published title to support Play Anywhere, an initiative that lets you play first-party Xbox One games on PC. Not content to let that alluring feature carry the whole package, developer The Coalition has whipped up over two dozen PC-exclusive features.

Technical director Mike Raynor spoke to Eurogamer's Digital Foundry editors about the bells and whistles planned for Gears of War 4 on PC. "Today we sit at 28 different settings and we're thinking of ways to add more for people to really have full control," Rayner said. "Along with more settings, we're putting extra time into making it clear what impact a setting will have on GPU/CPU/VRAM so there is a clear correlation between a setting change and its performance impact."

Other features include full input remapping, a wide array of video settings, increased texture resolutions up to 4K in select cases, and a benchmark mode that seems designed to show you how much of a toll changing a setting will or will not have on game performance—a practice heretofore based largely on changing a setting or two at a time and crossing your fingers that the game doesn't crash or run at a glacial pace.

The full interview is up at Digital Foundry, and is a fascinating deep dive into Gears of War 4's technical composition.

Shacknews - Shack Staff

Blendo Games' Quadrilateral Cowboy, one of the quirkiest games of the year, launches today. Are you an elite enough hacker to navigate the Internet with your blazing fast 56.6k modem? Check out the official trailer to see if you are up for the challenge!

For more great videos, be sure to subscribe to Shacknews on YouTube.

Gamers can pick up Quadrilateral Cowboy on Steam for $18.99 (5% off) until August 1st.

Shacknews - David Craddock

A new post on Blizzard's Battle.net forums invites Hearthstone fans to start getting excited for a 'special Hearthstone announcement' during ChinaJoy later this week. The announcement will be made during a streaming event on Blizzard's Twitch channel, and the stream kicks off at 11pm Pacific this Thursday night, July 28—that's 2am Eastern time Friday, July 29.

"Furtive rumors swirl about an upcoming party of unfathomable grandeur," the forum post reads. "Who could it be for, and, more importantly, are YOU on the guest list? Join Lead Game Designer Ben Brode for a special stream that’s sure to delight, enthrall, and illuminate!"

Signs such as a recent invite to this Thursday's Twitch stream point to Blizzard unveiling Hearthstone's next Adventure, the game's single-player modules that reward you with specific cards rather than a grab bag of randomized selections.

Shacknews - John Keefer

Remember when we thought that No Man's Sky would be coming out at the same time on PlayStation 4 and PC? Of course, there was the delay to August, but even when August 9 was officially confirmed, nothing was said by developer Hello Games about any change to a simultaneous release.

Until now.

According to the About page on the official site, it looks like the PlayStation 4 version (which won't require a PS Plus membership) is going to get three days of exclusivity, with the PC version now coming on August 12. The change must be fairly recent, given that the game's Steam page and Humble store page still have an August 9 date. Granted, three days is not long in the overall scheme of things, but it is a delay for PC players eager to get their huge space sim.

We've reached out to Hello Games for some reasoning and will update if we get a comment.

Shacknews - Daniel Perez

Capcom has confirmed what the Internet has known all along: Ryu is hot!

The alternate costume for “Hot Ryu” has officially been called “Battle Costume Ryu” since its debut in Street Fighter 5. In fact, there are more searches for the term “Hot Ryu” over “Battle Costume Ryu” on Google, which we’re sure Capcom has taken notice of. That’s why the company confirmed the alternate costume is now called “Hot Ryu.”

The confirmation comes in a number of ways, including Hot Ryu’s official Funko Pop! Asia figure, which can be seen below to be called Hot Ryu:

In addition to his Pop, Street Fighter producer tweeted out the following promotional message, promoting the inclusion of the Hot Ryu figure at a booth during San Diego Comic-Con:

That's not all as Capcom also confirmed the costume is being called Hot Ryu at their booth at San Diego Comic-Con. Polygon’s managing editor Michael McWhertor took a picture of a notice saying Capcom’s booth was out of Hot Ryu figures:

As of this writing, the costume is still referred to as "Battle Costume Ryu" in Street Fighter 5. We've reached out to Capcom to see if there are any plans to change the alternate costume name in-game and will update our story accordingly.

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