Can Super Mario Save Nintendo Stock, Again?

Investing in Nintendo (OTC: NTDOY) has been more Rainbow Bridge than Rainbow Road these days. Shares of the Japanese gaming giant have plummeted 43% since hitting an all-time high last summer. A surge in memory prices, along with lukewarm sales for the new Switch 2 console that hit the market last year, have weighed on the video game pioneer.

Thankfully, a new catalyst is being projected on the silver screen this week. The Super Mario Galaxy Movie premiered on Wednesday, giving Nintendo a great opportunity to reignite consumer excitement for the franchise. Another blockbuster would also generate a healthy infusion of incremental revenue for Nintendo and its studio partner Comcast (NASDAQ: CMCSA).

Image source: Getty Images.

Plumb and plumber

Let's get the bad news out of the way. Critics aren't exactly warming up to the movie. Just 44% of the pro reviewers polled by critic aggregator hub Rotten Tomatoes are recommending the movie. The good news is that it probably doesn't matter.

The first animated theatrical feature -- The Super Mario Bros. Movie -- hit your local multiplex three years ago with an equally unimpressive critic score of 59%. The audience score for the first film would clock in with a 95% approval rating. Fans of the franchise are going to look past the poor scores from the critics community. Super Mario has multi-generational appeal, and the new film introduces a couple of popular characters that weren't featured in the first installment.

The 2023 movie grossed $1.36 billion in worldwide ticket sales. Only Barbie -- with $1.45 billion at the box office -- fared better. Nintendo and Comcast stock can use a boost for their languishing market activity.

Looking for cheat codes

Nintendo was in a better place at the end of March last year. There were a couple of catalysts waiting to boost its prospects and profile. The Switch 2 -- Nintendo's first new console to hit the market in eight years -- would be available in early June. Comcast would be opening the third Super Nintendo World -- this time at the brand-new Epic Universe theme park in Orlando -- in late May.

It didn't take long for the wheels to start coming off the Mario Kart. April 2 last year was Liberation Day, with the White House announcing new tariffs. Nintendo would call off U.S. presales that were initially set to start a week later, giving it time to assess pricing implications. The console would still hit the market at the initial price, but Nintendo reserved the right to tweak the prices of games and accessories to help offset the new tariffs.

The Epic Universe theme park would open to initial jaw-dropping reviews until the crowds arrived. Long lines and unreliable key attractions have made the gated attraction the worst-rated major area theme park on TripAdvisor and Yelp.

Still finding a way to win

The surge in memory prices has been challenging for video game stocks. Nintendo is being hit particularly hard, given not just the console's internal memory but also the unique flash memory on the actual game cartridges. Nintendo recently announced that physical games may now be priced differently than digital downloads.

The initial demand for the Switch 2 was brisk despite the initial tariff hiccups. There's a reason Nintendo stock peaked several weeks after the console's launch. Sentiment has soured in recent months. Just last week, Bloomberg reported that Nintendo would be slashing its production of new consoles. It will now produce just 4 million consoles in the new quarter, down from 6 million.

Is the new system not resonating with players, or is it just a matter of inflationary and economic concerns weighing on the global audience? Analysts still see Nintendo's revenue doubling in the fiscal year 2026 that ended earlier this week, but they're now modeling just 9% top-line growth for the year ahead. Wall Street pros are also backing off from the margin expansion Nintendo often sees in the second year of a new console, as hardware sales shift to higher-margin software and accessories. Analysts now see a modest 10% improvement in earnings per share in fiscal 2027.

It's against this dicey backdrop, after a year of bad timing and global misfortune, that The Super Mario Galaxy Movie is coming out at just the right time. Give Nintendo fans -- and us Nintendo investors, too -- a break from reality. A hit film, fun core memories, and even the gaming giant's promising new Pokémon Pokopia release might be just what Nintendo needs to turn sentiment (and its share price) around.

Rick Munarriz has positions in Nintendo. The Motley Fool recommends Comcast and Nintendo. The Motley Fool has a disclosure policy.