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While it’s not necessarily at the top of everyone’s list for fascinating gaming news, this has been a year with a fair amount of activity around Nintendo’s share value. Unsurprisingly the value of the company rose along with its profits in 2020 as the demand for gaming entertainment rocketed; the reverse has been happening in 2021 as that demand has fallen back.
Despite Nintendo undertaking a major buyback and cancellation of shares in August and September, a move that typically boosts share value, stock has continued to trend downward. This week it fell below 50,000 Yen per share for the first time this year, seemingly driven by a major sell-off by Cathie Wood and their Ark Innovation ETF trading company – per Bloomberg. Ark has been scaling back its shareholding in Nintendo since late February, a period that has seen consistent declines in value, down 28% in that period.
Bloomberg also highlights an analyst from CLSA Securities Japan Ltd, Jay Defibaugh, placing a sell rating on Nintendo stock last week, going down two levels from ‘buy’ to ‘underperform’. He’s quoted as saying Switch is “on the cusp of a multiyear slowdown,” anticipating that profits will continue to fall through 2024.
Though it’s tempting to dismiss this sort of talk the reality is that it does matter to Nintendo as a business, and senior management will – at the very least – have a close eye on the trends with investors. In addition to 2021 sales being down on the boom of 2020, there are also analysts disappointed in the arguably minor upgrade of the new OLED model, clearly with the belief that Nintendo needs bolder moves in order to increase and grow its business.
There are various challenges in the market, however, so it can be argued it’s not so simple as pushing out a new, more powerful system and watching the sales fly in. Global industry and manufacturing is still grappling with varying degrees of the global COVID pandemic, and in addition there is the well-known and ongoing issue of chip shortages. As Sony and Microsoft have learnt with PS5 and Xbox Series X|S, meeting demand on popular new hardware is extremely difficult.
Company share prices rise and fall with the seasons, it seems, but there’s no denying that investor confidence is wavering with Nintendo at present. It’ll be interesting to see what the company does in the medium-to-long term to boost profits and keep shareholders happy.