NINTENDO shares tumbled after reports that the company was pushing back the launch of its Switch successor to the beginning of next year.
The shares dropped as much as 8.5 per cent in Tokyo on Monday (Feb 19), their biggest intraday decline in a year. The Kyoto-based company told its game publishing partners that the release of the next-generation video game console will be delayed to the early months of 2025 from the last quarter of this year, Bloomberg News reported. Some of Nintendo’s partners were advised not to expect the still-unannounced console until March 2025 at the earliest.
Investors may further unload Nintendo shares as they had been buying the stock on expectations that the company will replace the seven-year-old Switch with a new machine in 2024. Nintendo hit an all-time high last week on such sentiment, though Goldman Sachs Group analyst Minami Munakata had warned the stock looked overvalued.
Nintendo is seen holding back its future slate of blockbuster game releases for the next-generation hardware, which adds to the downside of any delay. Software is the most lucrative part of the company’s business, but it is unlikely to release new entries in its biggest franchises such as Legend of Zelda, Mario and Splatoon before the upgrade, according to Serkan Toto, a Tokyo-based consultant to video game developers.
President Shuntaro Furukawa deflected questions about new hardware this month after Nintendo reported earnings, saying the company will discuss its plans for the next fiscal year after it concludes the current one. He added that selling more of the existing console will be challenging, with 139 million units sold already. Without a Switch 2 for the holiday season, Nintendo will battle much newer and more capable consoles from Sony Group and Microsoft.
Still, some investors may see further declines in Nintendo’s share price as an opportunity to buy on a dip, according to Bernstein analyst Robin Zhu. He expects an announcement for the new hardware to come within the next six months. BLOOMBERG
