TCEHY - Saudi Arabia Is Betting Big on Nintendo (NTDOY) Stock

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All eyes are on video game company Nintendo (OTCMKTS:NTDOY) after Saudi Arabia’s Public Investment Fund (PIF) disclosed an 8.3% stake in the company, up from 6% at the beginning of the year. PIF also owns stakes in other video game companies like Electronic Arts (NASDAQ:EA) and Take-Two Interactive Software (NASDAQ:TTWO). According to Bloomberg, PIF’s stake makes it the second-largest shareholder of NTDOY stock, only trailing Nintendo itself. PIF’s stake is also greater than Japan’s Government Pension Investment Fund.

Nintendo is PIF’s third Japanese video game investment that has passed the 5% ownership threshold, which subsequently requires a public disclosure. The fund’s two other large Japanese video game investments include Nexon and Capcom.

Meanwhile, experts believe that PIF will likely increase its stake further to become the largest shareholder. “I think PIF is not even done and wouldn’t be surprised if it continues to increase its stake in Nintendo going forward,” said industry consultant Serkan Toto.

Saudi Arabia’s PIF Increases Stake in NTDOY Stock

Last year, PIF announced that it would launch Savvy Games Group, an investment fund catered to video game and esports companies with a $38 billion budget. Earlier this week, the fund disclosed its first Chinese video game investment, a $260 million stake in competitive gaming company VSPO. VSPO markets and operates competitive gaming events for games like League of Legends and PUBG and is also backed by Tencent Holdings (OTCMKTS:TCEHY).

The NTDOY and VSPO investments are a part of Saudi Arabia’s plan to diversify away from oil. Other industries that the Kingdom is investing in include electric vehicles (EVs), renewable energy and data analysis. PIF currently owns a massive 60.66% stake, equivalent to 1.1 billion shares, in emerging EV company Lucid (NASDAQ:LCID).

Nintendo recently announced its earnings for the nine months ended Dec. 31. Total sales tallied in at 1.29 billion yen, down 1.9% from 1.32 billion yen a year ago. Operating profit was 410.54 million yen, which also fell 13.1% lower compared to 472.55 million yen a year ago. On the bright side, Nintendo remains profitable, reporting a profit per share of 297.05 yen, down from 310.6 yen.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. 

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