Yesterday, we reported that Nintendo's share value had sunk amid reports that its mooted 'Quality of Life' project had been scrapped. However, we're now hearing reports that the two-day drop - the biggest Nintendo stock has experienced in 18 months - is also related to a lack of confidence from investors as the Switch makes progress through its second full year on sale.
According to Bloomberg, analysts have been getting "dozens" of inquiries from hedge funds and investors who are struggling to understand why stock is being offloaded in such high volume. While there's no solid reason, there are plenty of theories - such as a lack of new games for 2018, no surprises for E3 and concerns that Nintendo will fumble the launch of its online service this September.
In the past week we've had news of three new Pokémon titles and hints that Fortnite - currently the world's biggest game - is finally making its way to the console. We also know that Super Smash Bros. is coming to Switch this year. While all of this is good news, it would seem that investors are worried that Nintendo has used up all of its ammo for 2018 and won't have anything to dazzle consumers at E3.
Amir Anvarzadeh, a senior strategist at Asymmetric Advisors in Singapore, told Bloomberg:
The market is probably selling shares ahead of E3 because people are concerned Nintendo doesn’t have a pipeline that will wow investors to a point where analysts will have to raise earnings targets again. The other question is whether their network infrastructure is really ready to cater to online gaming. They’re years and years behind on the network business. That doesn’t mean they can’t catch up, but Sony spent billions on fortifying the PlayStation Network expansion.
Of course, investors are notoriously fickle and shares rise and fall all of the time. If Nintendo can put in a decent E3 and launch its online service without any problems, then confidence is sure to return.