Precise Investors

Saturday, December 10, 2022
Stocks & Shares

Nintendo shares plunge on first quarter earnings


Stocks in the company tumbled 10%, hitting its lowest intraday level in a year

Nintendo shares plunged on Friday after the gaming giant’s disappointing Q1 earnings, which indicated fading demand for its popular Switch console.

Stocks in the company tumbled 10% at one point, hitting its lowest intraday level in a year. Trading spiked, with Nintendo leading the first section of the Tokyo Stock Exchange in trading value at one time.

The sharp decline comes a day after the company reported a 13% decline in net profit for the April to June period. Operating profit was down 17% to 119 billion yen ($1 billion), which was below the market consensus.

Nintendo suffered a decline in both software and console sales, mainly because the company had seen unprecedented demand a year earlier at the height of the pandemic.

The company’s Animal Crossing: New Horizons video game, released last spring, became an instant global hit during the pandemic Covid lockdowns. It was the main driver of Switch console purchases, with more than 33 million copies sold worldwide.

Citigroup analyst Kota Ezawa notes in his report that Switch hardware sales amounted to 4.45 million units, substantially below our forecast of 5.5 million. The market may well have braced itself recently for a degree of weakness in earnings, but we do not expect the negative impression to be readily dispelled.

Second quarter sales could be worse due to the chip shortage, warned Hideki Yasuda, a senior analyst at Ace Research Institute.

The global electronics and auto industries have been struggling with an unprecedented chip shortage since late last year due to a combination of factors, including unexpectedly strong demand across a range of sectors.

Nintendo has acknowledged logistics delays caused by the pandemic, as well as the effects of the semiconductor shortage on production.

Meanwhile, some analysts believe there is still strong demand for Nintendo games.

Morgan Stanley MUFG Securities analyst Masahiro Ono points out that the first quarter had the toughest year-on-year comparison for Nintendo. Considering that Animal Crossing accounted for 40% of sell-through in the previous first quarter, we believe demand remains at nice and high levels.


The articles are for information purposes only and Precise Investors shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.

Precise Investors does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

Leave a Reply