Nintendo's stock in Japan experienced the largest intraday decline in a year due to the delay of the release of Switch 2.
Nintendo's stock in Japan plummeted, and the release of Switch 2 has been delayed until early 2025, affecting game releases and potentially leading to investors selling off stocks. Nintendo's president avoided addressing the new hardware issue, stating that increasing sales will be a challenge. Nevertheless, some investors see the drop in stock price as a buying opportunity.
Zhitong App learned that Nintendo's stock in Japan plummeted, as reports indicated that the release of its Switch 2 has been postponed to early next year.
The stock tumbled by 8.5% on Monday in the Tokyo stock market, marking the largest intraday drop in a year. The Kyoto-based company informed its game distribution partners that the launch of its next-generation console, Switch 2, will be delayed from the last quarter of this year to early 2025. Some of Nintendo's partners were advised not to expect this undisclosed console until at least March 2025.
This delay may lead to further selling of Nintendo's stocks by investors, who have been anticipating the company to unveil a new machine in 2024 to replace the current 7-year-old Switch. Fueled by this sentiment, Nintendo's stock hit an all-time high last week; however, Goldman Sachs analyst Minami Munakata cautioned that the stock was overvalued.
The postponement of the next-generation Switch launch by Nintendo also impacts the release of several highly anticipated games in the future, adding to the adverse effects of any delays. Serkan Toto, a consultant for Tokyo electronic game developers, stated that software is the company's most profitable business, but it is unlikely to release new products from major series like "The Legend of Zelda," "Mario," and "Splatoon" before the upgrade.
After announcing the company's performance earlier this month, Nintendo President Shuntaro Furukawa avoided questions about new hardware, stating that the company would discuss plans for the next fiscal year after the current fiscal year ends. He added that the sales of existing game consoles have reached 139 million units, and increasing sales will be a challenge. Without the Switch 2 during the holiday sales season, Nintendo will face competition from updated and more powerful gaming consoles released by Sony and Microsoft.
Nevertheless, Bernstein analyst Robin Zhu suggested that some investors may view the further decline in Nintendo's stock price as a buying opportunity at a low point. He expects the new hardware to be released within the next six months.