Nintendo Co., the renowned Japanese video game developer, witnessed a significant dip in its stock value following reports of the company postponing the launch of its anticipated Switch replacement until 2025, as reported by Bloomberg.
The shares experienced their most substantial intraday decline since October 2021 on Monday, plummeting as much as 8.8% in Tokyo. Nintendo, headquartered in Kyoto, communicated to its game publishing partners that the next-generation video game console is now slated for an early 2025 release, rather than the previously expected last quarter of this year, according to Bloomberg. Partners were advised by Nintendo not to anticipate the undisclosed system until at least March 2025.
Investors, who had previously driven the stock to an all-time high in anticipation of a new device replacing the seven-year-old Switch in 2024, may continue to sell off Nintendo shares.
Mio Kato of LightStream Research commented, “There seem to be a lot of new buyers of Nintendo who may be less familiar with the name and more impatient for the company to put up visible numbers. Nintendo’s numbers for the March 2025 fiscal year could start to look rather ugly if key software is delayed at the same time that the current hardware has aged so much.”
Compounding the situation, reports suggest that Nintendo is holding back its upcoming blockbuster games for the next-generation hardware. While the software remains the company’s most lucrative division, Serkan Toto, a video game developer consultant in Tokyo, believes that the release of new games in flagship franchises like Legend of Zelda, Mario, and Splatoon is unlikely before the upgrade.
Nintendo President Shuntaro Furukawa, in the recent earnings release, evaded queries about upcoming hardware, stating that the company would disclose its plans for the next fiscal year after the current one concludes. He noted that 139 million units of the current console have already been sold, acknowledging the challenge of selling more if a Switch 2 is not released during the holidays. The company may face competition from newer and more advanced consoles from Microsoft Corp. and Sony Group Corp.
Despite the stock decline, Bernstein analyst Robin Zhu suggests that some investors might view it as an opportunity to acquire Nintendo shares at a discounted rate. He anticipates an announcement regarding the new hardware within the next six months.
