News Article

Nintendo Misses Out on Nikkei 225 as Stock Slumps Over 8%

Posted by Thomas Whitehead

Recent stock rises partly due to potential of joining the listing

Earlier in the Summer we saw increases in Nintendo's stock value as a strong performance from the 3DS and the prospective inclusion on the Nikkei 225 Stock Average drove positive trading. The Nikkei 225 lists notable stocks and is undoubtedly a positive inclusion for any company (similar to the Dow Jones Industrial Average in the U.S.), and there was some expectation that Nintendo would join after changes in the Japanese market structure — a merger involving the Tokyo and Osaka stock exchanges — made that possible.

The bad news is that today's announcement on new inclusions to the Nikkei 225 did not include Nintendo, so it may now be reliant on extraordinary inclusions should any listed companies go bankrupt or dissolve. Intriguingly, some analysts had projected earlier in the year that Nintendo would be considered too big to be added, as its market value is reportedly $15.4 billion.

On the flipside, today's news has prompted some analysts to change their Nintendo stock recommendations from Buy to Sell, with the close of trade in Tokyo bringing a share value loss of 8.4% to 10,860 Yen; that's the biggest drop since July 2011. That compares unfavourably to the share value of 14,050 yen that we reported back in July, and two analysts that changed their recommendations for the stock said the following.

Jay Defibaugh — analyst at CLSA in Tokyo

The early signs of key first-party software inducing a major turnaround in Wii U console fundamentals are not promising, and the outlook for third-party support is grim. The value of iconic Nintendo franchises may be declining as younger generations discover gaming through mobile devices.

Takao Suzuki — analyst at BNP Paribas SA in Tokyo

We believe Nintendo’s shares have been overvalued due to speculative demand, on the assumption that they would be included in the Nikkei. As this expectation has come to nothing, this appears to be the right time to sell.

Of course we've seen stock fluctuations, in both directions, a number of times before. The company's absence in today's Nikkei 225 update, and the current struggles of the Wii U, have naturally combined to cause a drop; we'll see how things fare for Nintendo's accountants and — most importantly — its games and hardware in the coming months.

[via bloomberg.com]

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User Comments (33)

Metalslime

#3

Metalslime said:

I'm really not sure share price indices and what not should really have a place on this website. Sure, sometimes there are articles that are indicative of actual things of interest going on in Nintendo, Japan and the gaming and technology industries at large but this sort of article...not so much. We're gamers, we're not investors. and vice versa. just pointless IMO

cfgk24

#4

cfgk24 said:

Nintendo will still make a profit :) They are innovating so long term prospects are good - with a fab Holiday season coming up and 2ds release along with the sales of 10,000,000 copies of Pokemon - now is the time to buy!!

TobieOBrown

#5

TobieOBrown said:

@Metalslime This website is laid out clearly: there are sections for games and there is a section for news. This is news pertaining to Nintendo and is therefore relevant to include on a Nintendo website with a news section.

But I'm thinking that's not why you're concerned with this article's existence.

For one, don't assume that nobody on this site is an investor. I once held Nintendo stock but have since sold off my stake in the company. I know I've seen at least one other member here claim to own Nintendo stock.

For two, the takeaway of this story isn't "Nintendo stock drops" - it is, rather, "Nintendo is failing." You do not want to accept this and in turn rebuke the article that brings you the news. To that I say: don't shoot the messenger.

It's easy to read these news stories about other people damning something we are passionate about, but it's time to face the facts. Nintendo is slipping. Support for its own system is weak. This fact applies to far more than the pathetic trickle of software: deadlines are not just repeatedly missed but abandoned entirely; internal development pipelines are obviously not up to snuff; advertisement is virtually nonexistent, and where it does exist it is inadequate; relatively little is being done to actively court western developers.

People call Nintendo out of touch, and they aren't wrong. Nintendo managed to luck out with the DS (touch interfaces happened to become a rising standard in coincidence with the DS) and again with Wii (the hardware was a one-trick pony and a hot holiday item). Even if we were to pretend that they were strokes of genius, it cannot be denied that the systems' success was mismanaged. Nintendo wrongly assumed that sheer volume of units sold would mean third parties would put their best foot forward in spite of processing disparity between the Wii and other 5th gen consoles. This did not happen. Third parties saw the audience (grandmas and 5 year olds) and adjusted their stratigies in spite of Nintendo's: they dumbed down their games. Look no farther than the stupid, cartoony versions of Madden on Wii as the perfect example. For a few years EA made crappy, arcade-style Madden games to try to appeal to the broader audience. When no one bit, they did a 180 and tried to bring over gimped ports. By that time though, everyone had moved on to more capable consoles.

The only thing Nintendo has left is its franchises, but what good does that do them if they can't sell the machines to run them? I've been a fan in denial for years. Don't consider this post an attack, but rather an intervention for both your benefit and my own.

Food for thought.

CardCanuck

#6

CardCanuck said:

To Jay Defibaugh's analysis: "...declining as younger generations discover gaming through mobile devices." That makes no sense. If mobile devices are having such an impact, then why is 3DS red hot?

The Wii U's success will never be as great as the Wii was, but I have a feeling that after the New Year, the tunes will change. The PS4 and Xbox One will have great launch sales (mostly because people will turn around and sell their systems on eBay) but then slow down like the Wii U did. On the other hand, by that time plenty of first-party games will be out for the Wii U, and I'm sure sales will pick up. The exact same thing happened to the 3DS folks.

Bliquid

#7

Bliquid said:

@Metalslime : you could just not read these articles, or close your eyes like you seem to do.
As a gamer though, you should care if your favorite company struggles, mainly because you could end up not having that company producing your favorite games.

Peach64

#8

Peach64 said:

@CardCanuck The 3DS is far from red hot. It's been the best selling console in North America for two months, but really it's outselling two 8 year old machines and a new machine that's getting the worst monthly console sales since the saturn. Look at DS sales and you'll see a big chunk of the market has gone.

CardCanuck

#9

CardCanuck said:

@TobieObrown You are of course entitled to your opinions, but should also expect rebuttals. Nintendo is out of touch with the hardcore gamer, but that does not make up the entire gaming demographic, just the most vocal one. This was proved with the Wii. How can the Wii have been a one-trick pony when it outsold the PS3 and Xbox 360?

As for third-party, yes games were dumbed down for the Wii like Madden, that's because of the inferior hardware. But third-party games were made for the Wii because of the sales of the systems. EA probably didn't want to make games for the Wii, but from a business standpoint, you make games for systems that sell. That's why the Wii U is struggling with third-parties. If somehow the Wii U sales soared, you can bet those third-parties would be crawling back to Nintendo.

You're right, Nintendo does lean on its own brands for games, but if they are what the faithful want, and they sell well, so why wouldn't Nintendo keep making Mario games? I would like to see some new IPs from Nintendo, and maybe something a little more mature, but there is still a place for Mario games.

@Peach64 I totally agree the 3DS is not going to be as successful as the DS was. But you have to look at relative to its era. The DS didn't have to compete with mobile devices. Considering how strong gaming apps are on SmartPhones and tablets, you have to admit that the 3DS is silencing those critics that said it would tank in the market.

MadAdam81

#10

MadAdam81 said:

And then they will be undervalued, profits move up due to improving sales and then the stock prices surges up again.

Metalslime

#11

Metalslime said:

@TobieOBrown Thank you for taking the time to write out such a long response and I did actually read it before you think I just skimmed it looking for things to argue about. I'm far too tired for that :P

"For two, the takeaway of this story isn't "Nintendo stock drops" - it is, rather, "Nintendo is failing.""

Tbh I think you're going a bit far if that is what you can gather from this tiny article. Personally, I see investor confidence is down and the fall in stock price reflects that. You can attribute it to whatever you want but all it is, at the end of the day is speculation.

If nintendolife want to do an opinion piece on what Nintendo is doing right, the many things they're doing wrong and the things they can do to fix their current situation I would more than happy for it to be on this website. I'm not afraid to criticise Nintendo but I don't think that this slump is necessarily indicative of any real concern that I have for the company, not that I don't have them.

@Biliquid: I like a few nintendo games and I'm pretty sure 50 years from now the likes of mario or pokemon will be around in some form. Whether or not Nintendo as we know it exists in the same way doesn't really matter

unrandomsam

#12

unrandomsam said:

Nintendo play their own game when they go wrong is when they try to copy other peoples.

They are not even close to failing they have loads of cash are not bleeding it like Sony and MS have been. (Hence still making a profit).

They are not doing what would be best for me but they are doing fine.

unrandomsam

#13

unrandomsam said:

Infact I think Sony might well be in a worse position. By giving all their games away for £5 a month when the next gen comes people will be much less willing to pay £60

Nintenjoe64

#15

Nintenjoe64 said:

Nintendo's stock price going down means next to nothing because, as one analyst points out, the gains in stock price were purely speculative therefore had to come down once the speculation turned out to be incorrect.

In 2006 around the launch of the Wii and while the DS was beginning to rule the world, Nintendo's stock was low and then they spent 4-5 years selling their consoles and games which put the value back up. This will continue to happen as long as there are hardware life cycles.

Spoony_Tech

#16

Spoony_Tech said:

@CardCanuck I don't necessarily think 3rd parties will come crawling back. Its well known now that 3rd paries don't sell nearly as well on Nintendo consoles. Just look at the sales of all the top games on the Wii. Other then Just Dance nothing even came close to sales on the other HD systems for like game. Of course a couple of factors goes into that like weaker hardware and the fact Nintendo got a bad port or weaker port. Same thing will happen this gen as Nintendo has the weaker hardware! Even if some come back how long will it be before we see those games on the Wii U. A year or two?! Looks like Nintendo will have to float the boat for at least another year before 3rd parties come back around. By then who knows what the gaming scene will look like!

I do however believe both Sony and Microsoft will also struggle after the holidays!

CardCanuck

#18

CardCanuck said:

@Spoony_Tech Smart response. I agree with you on almost every point. The only thing I would argue is that third-party developers and publishers don't really care if it sells better on Nintendo than the other systems. If it makes a profit on Nintendo, they will make a game for Nintendo. I do think you're right about another year before a possible turnaround in support. Kudos :-)

N64ever

#19

N64ever said:

The stock market is a roller coaster on an Endless loop no need to get all Scared. As for third party support. Don't really care that much for third party games. I think it's marvelous that Nintendo still makes its own games. Ever see any games made by Xbox or Playstation anymore? Of course not they rely on outside sources to make games for them same with mobile devices. If your a video game console company who cares about gaming then you will make the games yourself.

mike_intv

#20

mike_intv said:

A lot of stock analysts (a) don't really understand everything about video games and video game companies and (b) are looking at today, not tomorrow.

Nintendo's business is video games — hardware, software, and IP management. That makes it a much different creature than Microsoft (which has had issues with hardware such as Surface and purchases such as Nokia) and Sony (which has had legitimate solvency issues).

About half of Nintendo stock is also in the hands of large investor (former executive and banks), meaning it is in much better shape to weather fluctuations since people are holding it for the long-term and not looking to "buy low, sell high, make a profit" which guides so much investment information.

But while it has no direct impact on gaming — it is never good news when the stock goes down 8% or people rate its stock as a "sell." The lack of investor confidence can make it tough for some people to take the company seriously.

rjejr

#21

rjejr said:

I really think rather than worry about iOS games Nintendo needs more of a retail presence, preferably in the form of a theme park. Or at the very least a Nintendo themed mini-golf course. I've taken my kids on several occasions to Nintendo World in Manhattan, and it's just a store. We've also been to Lego Discovery Center in Westchester and it's a mini-crowded overpriced amusement park. Lego has been opening these all over the world. If Lego can do it surely Nintendo can do it. Or at the very least a string of video arcades akin to Chuck E Cheese. Disney is Disney in part b/c of the brands and characters but it's also a major tourist attraction for kids. And their stores are very popular in the malls. Nintendo can at least have a string of mall stores selling Pikmin and Pokemon plushies and bed sheets and schoolbags and alarm clocks and Link and Zelda dress-up clothes. I know they don't have a lot of IP to fill entire stores but Apple only has about 4 - Ma,c Macbook, iPhone and iPad - and they have stores. Maybe Nintendo could license w/ Sega. Sonic has had cartoons, I know he's popular.

mch

#22

mch said:

Thanks for writing this article. IMO this is Nintendo news. The stock price does in the long run have an impact on the products a company produces and is going to produce.
So the price of the stock shows a big drop and is now again in fields where it was half a year ago (before the Nikkei speculation).
To me it seems like a great time to jump in. The big guns (games) are coming, x-mas-holiday sales will be essential and (most important) risk of loosing too much money is barely existing cause the share price is that low that it's close to the value/assets of the company.

Macarony64

#23

Macarony64 said:

This is a normal day in the stock. A few months back Sony stock was trash and in this months still is but they haven't go anywhere.

Cohort

#24

Cohort said:

A rise of 31% proceeded by a drop of 8% is not really what I'd call a slump..

ikki5

#26

ikki5 said:

This article fails to show really what Nintendo's stock is like. Even after this Nintendo has had a positive stock increase this year somewhere around of 15-20% or something after this so... I doubt it is trouble for them

dumedum

#27

dumedum said:

@mch well, it's important to remember that except for the shares Nintendo affiliates hold themselves, the price drop doesn't cause damage to Nintendo financially. It's all in the secondary market already. Nintendo could in fact care less about the stock market. It has many indirect consequences but it's not money loss to the Company.

ThomasBW84Admin

#28

ThomasBW84 said:

@ikki5 I'd say the main angle was the Nikkei listing, something that was expected in some quarters. 8% has been a rapid fall when it came out that Nintendo wasn't included. I do agree with those that say these things fluctuate and go up and down. We don't report every rise and fall like plenty of others do, we try to restrict these articles to notable changes or events.

Ben_Rage_V2

#29

Ben_Rage_V2 said:

As someone who has held stock in Nintendo since the late nineties, maybe I can give a different perspective on this news. First I would like to say I am not panicking yet, but I am concerned. I bought stocks right around the time Majora's Mask came out and after a few years that stock went below ten US dollars (it is currently at $13.80). I almost sold them, but I am glad I didn't, because during the Wii/DS era the stock soared to $70 per share. But the fact that Nintendo's stock has lost so much value so quickly makes me worry a little. This holiday will be critical for Nintendo, and I think if Ninty has an anything but stellar holiday, they will be in trouble. The Gamecube, as much as fans adored it, was a failure for Nintendo, despite it being profitable. If Nintendo's stock goes below Gamecube lows, then what we have here is another failed console. Don't forget that the Gamecube had a more successful launch than Wii U.

I am not ready to sell, in fact I have half an urge to buy more stock, because Nintendo has come back from worse before, however, $13.80 is a $56 decline in just a few years, so I think we should all be concerned.

Minny

#30

Minny said:

People forget that at the height of the Wii, Nintendo's stock in the US was valued in October 2007 at 78.50. It is now 13.80.

Many factors go into a stock's price, from Nintendo's conservative business approach to what investors feel the company is worth. This have nothing to do with the enjoyment one has while playing Nintendo hardware or software. However, these events are not particularly good for Nintendo.

drumsandperc92

#31

drumsandperc92 said:

xbone and ps4 are just around the corner but not out yet.
wait one more year, then ditch the Wii U and release another system, one that adopts the x86 architecture and equivalent power to the other 2 systems. Price for $400.
Separate it with better marketing. Call it something entirely different.
Include tablet/wiimote support but the main controller is a standard pad.
Launch Holiday 2014 with upgraded Mario Kart 8, new Zelda, Mario Galaxy 3 (or similar, NOT 3D World), and upgraded SSB4.
revamp Nintendo Network with actual accounts and link to 3DS, Wii U, and new system.
Call it "NEs 7" - marketing strategy=playing on how many systems Nintendo has released, showing experience. similar to how x360 included the THREE sixty in the name to go against PS THREE as opposed to xbox2 which would've sounded inferior.

i know im nuts and thats all a pipe dream but i'd buy that system in a second. Wii U just isn't cutting it for me right now.

elixxur

#33

elixxur said:

I have stock in SNE and it's doing well. I'm dumping it once the ps4 launches. As for Nintendo, it'll probably drop lower but go up if they start selling more systems. They seriously need to get things going asap.

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