This seems like a pure value stock to me right now. I hope so as I just went long.
The current market cap is just under $13B while there is over $11B in cash and cash equivalents and no debt. Assuming the stats are up-to-date that leaves a value of $1.2B for the entire company? That seems crazy. I think the Mario franchise alone would fetch a $2B if they decided to sell all future rights to it, not to mention Pokemon, Zelda, Metroid, etc.
I just don't understand the current valuation. If this were a US stock it would be a hostile take over target for Sony or Microsoft. I would think either company would pay big $ to get their hands on Nintendo as it would all but assure winning the next console generation. PS3/360 are dead even and basically split the "high end gamer" market in half while Nintendo rakes in the more casual side with only MS somewhat challenging now with Kinect (Move is DOA in my opinion).
Add to that domination in handheld and it makes no sense to me the current low value. Yes ipads, iphones etc. will take some of the ultra casual market but it also expands the overall pie so while 3DS probably won't achieve near DS it will still move tons of hardware and software. Vita hasn't made a dent and if it doesn't pick up soon it may be hard for Sony to continue it which would push more "core" gamers into the 3Ds
Wii U may be pressured but I think it will find it's niche. It may not "win" the next generation but I wouldn't count it out. Wii suffered from lack of online, last gen graphics, and poor third party support but it dominated until the last two years with only 2012 being a real disappointment - but 2012 saw no major titles released by Nintendo and little backing (Mario Party 9 is the only one I can think of). Even if they don't execute flawlessly the addition on real online will help. Third party would help but that will come if the system sells the games but realistically it's never been critical for Nintendo - GameCube was late to the party and had poor support but still moved 20M units while facing the PS2 which was simply dominant. GC had no backward compatibility and therefore no base upgrading which Wii has in spades, and because GC was the "best" technologically it wasn't the price leader which hurt it with Nintendo's core (younger kids and families). I don't think it will be massively hurt even as it's tech specs fall behind. Add in that Nintendo software usually dominates its own systems and that the margins on those are high I don't see how Nintendo doesn't mint money over the next few years - not at the Wii/DS peak levels but maybe 1/2 that or so.
I went ahead and cashed out with the big price spike locking in about 60% gain from my buy at $12.80.
I still like Nintendo as a long term buy but I do think it will fall back to $15 or so over the next few months so I may re-enter then. 3DS did well, but a little lighter than I would have hoped with huge releases in 2013. 2014 looks a bit leaner. WiiU had a decent holiday but with PS4 and XBox One tearing up their releases, and with no third party support I'm anxious to see if Nintendo can grow the base as it's even trailing GameCube at this point in it's lifecycle which is concerning.
I dont' really think China changes anything for the next few years. Tough market and I don't think Nintendo will try to crack it anytime soon despite the law changing.