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.
[source bloomberg.com]
Comments 60
Well. Better a calm before the storm at E3 than high expectations getting squashed.
Just like us they've not got a clue about what Nintendo will reveal at E3. Surely they don't pay attention to the leaks and rumours on Reddit.
To be fair, Nintendo needs to step up their game soon.
Surely these are things gamers worry about but not stock traders? Quality of Life being dead that is a valid reason but their network infrastructure? I doubt it.
Also "no surprises for E3" is one of the stupidest things I have read in a long time. We won't know until after E3 ffs.
My guess is that it's not about online play at all, they're concerned that Nintendo has no more AAA games to announce while the craze surrounding BoTW and Odyssey has dried up for the most part. Pokémon and Smash might not be enough to assure shareholders, but we'll see.
I honestly believe that Nintendo truly won’t have any surprises this E3.
So the shareholders expect the same as us: Very weak line-up (only Super smash, and Yoshi shown for the second time) and very weak online.
It's not just about their network itself though, it's more about their ability to 'recruit' new members for their ecosystem and their ecosystem's ability to retain those members. Nintendo never worked that way though - so far at least. I still think overall folks are rightfully concerend about whether Nintendo's current modus operandi is sustainable going forward, with a generational changing of the guard being in progress as well as a technolocial leap being in progress.
After all, Nintendo is not just behind in terms of their network and ecosystem, but also in terms of tech. Some people do care about 4K, and HDR is in fact a significant leap forwards. I still hope we'll see HDR support orna Switch-XL-or-whatever, because a HDR-patched Breath of the Wild would be mindblowing. A Switch with HDR and an appropriate OLED screen ... would be perfect
That is not such a huge deal right NOW, but 4K market share is rising, and it's not like the PS5/X2 is still 3+ years away. There alot of hurdles ahead for Nintendo in those regard, esp. seeing how hard they took the jump from SD to HD development. Just hoping for another Wii-Moment, counting on a casual consumer base which - in that form - no longer exists, seems risky indeed to say the very least.
For the time being, I don't see those issues really coming to the front though. The next months will all be about Pokemon and the likes leading the way successfully.
@NewAdvent
Now, I like a good conspiracy, but the price is still much much higher than it was back in September last year, and almost five times higher than five years ago around E3, so this is by no means cheap.
And Nintendo is owned by so many different holders that the only heavyweighter that could force prices like this are Nintendo themselves, and I'm not sure they want new shareholders in right now that DON'T know what they're going to see at E3, and might be upset.
Give Us a new Animal Crossing, and the Stocks will skyrocket like never before!
@RazumikhinPG think they have been doing a really good job lately, especially after the wii u. total 180. besides, each company should aim to improve, no matter who they are
Hmm well let's see... the majority of the big games for switch have already been released before on other systems. The virtual console people wanted will never happen. Functionality on the switch that people wanted will never happen (Netflix, internet surfing, etc). The online service honestly looks to be crap. And no GOOD games on the horizon (such as Animal Crossing). The switch was even passed over for a highly anticipated remake of Secret of Mana, instead being released on the PS4, because they figured that's where the profits are. I feel bad for Nintendo. Repeated bad decisions are crushing them. This is why they are keeping the 3ds going. Otherwise it would probably spell bankruptcy for Nintendo. And don't even get me started on all the hardware limitations and issues on that switch. Ugh. Step it up, Nintendo, you're going to have nothing left if you don't!
Sounds like it is time to buy Nintendo stock.
@Ralek85 The Switch has been successful largely because it is ahead of the competition in certain aspects of technology. It lacks some of what the competition lacks but the same goes for the competition. It's more like another branch on the tree of video game system evolution.
Isn't the whole point of a surprise is to be, y'know, surprised?
To be fair though, it's better to go into it with pessimism I guess. Still, to say Nintendo won't have ANY E3 surprises is unlikely.
@link12684 I agree they're doing better and the Switch had a huge start, but needs to keep momentum and I don't think it is.
Shareholders knew that Switch piracy is about to start in less than 2 weeks. There's nothing Nintendo can do about it, their stability updates are just a bluff.
@roboshort @ZiggyZane - Exactly, if I were a stocks person, I wouldn't have a problem putting some money on Nintendo right now: take advantage of the drop. Given the games we already know are in development, things are looking up for a couple years.
The reasons given for the stock drop just seem really thin and implausible to me. I wonder it it's due to something behind the scenes.
@Prizm You must see at a longer term. Nintendo is relatively small compared to competition and can't afford multiples AAA games at once. Even with unexpected surprises there is not much in the loop for 2019.
And the Mario Tennis online fiasco proved that Nintendo is nowhere near ready to handle online at a real scale ; and it's the stuff that generates the most revenue on the industry right now.
So, for an investor with surface knowledge, the future don't look good.
How about, like us, they wait until E3 actually happens before making assumptions
It makes you wonder if it makes more sense to drip feed info on games every month through directs so the share price doesn't keep yo-yoing when you only have 2-3 blowouts a year.
Personally I think Ninty are going to have at least five 1st party games for the end of the year (we know 4 of them in Smash, Pokemon, Yoshi, and Fire Emblem), and then there is support from 3rd party in the form of FIFA, Bethesda and Ubisoft are likely to continue supporting the Switch, a bunch from Namco, Capcom and SEGA, and stuff that were pretty sure of like Fortnite- and that's before anything surprises us.
Admittedly Smash and Pokemon won't drive sales as much as Mario and Zelda, but it will expand the player base a bit more, and those 18 million plus Switch owners are just waiting for new games. The Switch will do fine this year.
@SBandy yeah, that's a kind of oxymoron. If there are E3 surprises to talk about before E3, what even justifies calling them "surprises"? A surprise is something like that Metroid Prime 4 teaser Nintendo pulled off last year.
@Kiyata Nintendo doesn't have plans for VC brand on Switch - that never stopped all the released and upcoming retro games like ACA NEO-GEO, Sega Ages or Nintendo's own CGC. Netflixes and browsers remain a naturally low priority (if not honest redundancy) on a console you're not likely to play anywhere you won't bring your smartphone to, but Switch did get Hulu and NicoNico months ago. And is Animal Crossing the only possible "good game" in the public eye when we have Smash and Fire Emblem slated for the year? I love how people claim that stuff like Harvest Moon and Stardew Valley are supposedly niche appeal series, but the equally laid-back and slice-of-life Animal Crossing isn't.
Time to buy??
Didn’t Nintendo announce that they planned to shift 20 million switch units this year in the latest financial results? That can’t be based off nothing can it? There has to be more behind those numbers than just a smash bros game and some pokemon placeholder until the main one in 2019. We will see in a few weeks anyway. On a side note I am a bit worried about Yoshi and Fire emblem for this year as they haven’t done what Nintendo usually does for releases. Normally they announce a game, then months later we get some gameplay and a final title, then a few months after that a release date, then the release. With Yoshi and Fire emblem we have basically had nothing so bit worried they will be pushed back
This was a story about nothing and the explanations are nonsense. Gaming media trying to fill the pre-E3 vacuum and hysterical gamers hoovering it up.
I think @Kiyata wins the hysteria award for post #16. So far anyway. I bet somebody can beat it.
@electrolite77 Definite hysteria overdose in the comments. "sob sob Nintendo's got nothing to show!!" "Waaaah the online stinks!!!!" I haven't used their new online service yet so I can't comment, nor do I know their upcoming schedule.
Only a few more days to go people. Chill.
@Mr_Pepperami With Pokemon Let's Go, 20 million will be an easy target.
@WiltonRoots
Might as well enjoy it. The fan base will now split almost entirely into those who decide Nintendo are doomed because they've got nothing, and those who build up ludicrous overly ambitious expectations and then decide they're doomed after when they don't get fulfilled. It's the Nintendo Direct cycle, but amplified.
In the real world, if 'all' Nintendo have for 2018 is a mass-market targeted Pokémon, Smash, Yoshi, Fire Emblem, Mario Tennis and Captain Toad along with Octopath, Monster Hunter, Dark Souls, Crash Bandicoot and Sonic Racing plus what's already on the shelves (Mario, Zelda, Splatoon, MK8D, Donkey Kong, Kirby) they're looking very good for 20 million sales in the FY. Even if all we get on top is what's been strongly rumoured (Fortnite, Dragonball, Spyro, Diablo 3) and maybe another Wii U port like NSMBU they're home and dry.
@Ralek85 4k HDR mobile gaming is a long way off still, it’s barely making it into the PC market now. I don’t think anybody is hoping for that anytime soon.
@KingdomHeartsFan really? the switch is on pace to outsell the PS4 and already has outsold the xbox one. Also the switch is only a year old and they still have a lot of IP to release on the switch. IMO they are doing just fine.
@electrolite77 the thing is these same people don't reflect the opinions of the general public, they're a mere vocal minority. They use terms like "we" and "us" but in reality they mean "me".
And of course there will be crying because the latest loot-laden "AAA" stubblefest as a service is skipping the Switch as well. As for that last Direct, the UK chat was horrific, I had one look in there and wanted to slash my wrists, the US chat was good fun though!
Me personally? I'm not concerned at all as this is only a throwaway hobby and life has far bigger concerns than such trivia. I think I will be pleasantly surprised by E3 though.
@tekknik These software companies can't even get 4k running right on supposedly 4k consoles now...
@OorWullie
I'd be willing to bet they know exactly what is being announced. Nintendo can at times go to E3 with things they find exciting, and only them. Besides smash this might be one of those E3 showings.
@Pod Probably.
And let's not forget it really is not the first time of investors being super fickle over things that the actual gamers could be fine with.
Like I wouldn't be surprised if some of their fickleness stemmed not from "Nintendo doesn't have the infrastructure for good connection!" but rather "Are you serious? They will charge ONLY 20-30$ a year for internet services? What anti-profit stupidity is this!? They should charge 60-70$ a year like Sony and Microsoft do! Look at the infrastructure that built them! Nintendo is too stupid if they charge so low!"
Because a lot of them won't see the connectivity aspect of "online services" but really just the money aspect of how much companies charges for it.
I.e.: "Sony/Microsoft charge 60-70$ = That's why they have good network!"
vs
"Nintendo only charge 20-30$?! = What kind of stupidity is this, they'll never be able to compete!"
Even the crowd that Nintendo cater too wouldn't necessarily even "need"(traditionally preferring local over online multiplayer) the sort of infrastructure(let alone be ready to pay the same amount) that Microsoft/Sony supports.
@NewAdvent Probably investors being investors seeing only what investors see.
See, I don't think they even see the actual network structure Nintendo is actually using or plan to use.
All they see is that the companies whom they're told have good infrastructures are Sony and Microsoft and the thing that they see(money) is that Sony and Microsoft charge 60-70$ a year for said infrastructures investors are told is "good".
Meanwhile all they see of Nintendo online infrastructure is, again, not the actual network latency.... but money.
And what they see is that Nintendo never charged money before(Investor: "What folly is this, how can they think they'll get ahead without money!") for online services.
And what they see now that Nintendo IS announcing that they will start charging money to access online services.... is again the money. And that it is charging less than the competition(Investors: "Madness! This is too little not enough! They need to charge, twice, triple that price if they want to get ahead! Don't they know MONEY is needed for online infrastructure? Do they hate MONEY!? We are Investors, we know you need MONEY, RAR!")
It has nothing to do I bet with investors actually analyzing what the online infrastructure is like(network technology is not their deal) and everything about seeing "The guys with our experts tell us have the good infrastructure charge way more. Therefore more money charge = better infrastructure).
I might have a lot of Salty Opinions about common Investors of "Charging more money = Good and Necessary and more money should be charged because Profits" attitudes.
Buy now!!!
@tekknik There is afaik nothing really stopping anyone from 720p HDR or the likes though. 4K would be rather pointless at least on a small portable device, and the real meat - in my experience is HDR anyways. 4K looks crisper sure, but alot depends on the source material, the display, the viewing conditions (distance etc.) for it to be even noticeable. It doesn't really "awe", so to speak. A current-gen OLED being fed decent HDR content (which can be hit and miss like 3D content used to be) is pretty awe inspiring though. Unlike resolution bumps, it's not something folks have seen in recent memory.
BUY! BUY! SELL!! PANIC! Put everything into canned food and shotguns!
@roboshort I agree, but you make it sound, like Nintendo's approach is 100% mutually exclusive with what the competition has to offer. That's not the case though. Nothing about the Switch (to my knowledge) demands a barebones online service.
Nintendo could very well be the first to offer a proper hybrid console with a strong line-up, as well as a competitive online ecosystem, that compares favorably to PSN or XLG (which becomes all the more pressing with the Nintendo multiplayer no longer being free-of-charge by the end of the year).
I gotta say... they are behind. I trusted Nintendo since the GameCube with online and every time, tgey shoot themselves in the foot. Hell, the 3DS had a decent eshop but it didn't seem to follow through on the Wii U. The community was great but they ditched that😒 Now, there's no VC coming either. Sigh... I'm waiting to see what they have this time with fingers crossed🤞
@ZiggyZane Its a solid gamble. The stock could skyrocket with any announcement made at E3. Heck, we saw the Pokemon games jump it up a bit recently.
Or, maybe stop and think that maybe Nintendo despite its wealth and success does not have other big divisions like Sony and Microsoft (Technology, movies, etc.) to fall back on aside from merchandise and put into creating a spec heavy system that can go toe to toe with the rivals. Imagine if they did that and the system still bombed like Wii U, that could kill the company.
@NewAdvent
I really don't understand why so many investors would feel unsure approaching E3 considering we got some good pokemon news and the feeling is generally positive. I mean, the first half of this year was slow but now we're coming up to some pretty big releases for the next few months. It seems really strange to me.
Sounds to me like someones hot take and nothing more.
he could have posted it on reddit, plenty of hot takes there.
Share prices always fluctuate around E3. Investors are cagey In an ‘it could go one of two ways’ sort of fashion and don’t want the risk. It’s like someone not interested in horse racing placing a large bet on horse riding. Some likely think Nintendo have GONE FABULOUS too early by releasing Zelda and Mario in the same year.
Analysts. lol
Weren't they predicting Nintendo's demise a couple of years ago? Why do they get paid again?
@ZiggyZane do it ...i bough 4 shares a week ago
Nah, the market would have already priced in everything it knows about the Nintendo Network. If anything the price drop should have occurred when the news of the network was released if that was to blame, not now.
I must admit, when I picked up Splatoon 2 I was shocked and it actually made me laugh when I saw you needed and app on your phone for voice chat - that completely baffled me as to how behind they were. The advantage is they can move forward from here and take the best of what other services offer without taking any unnecessary risks
@Ludovsky
You're very right. We're talking about the investors that kept demanding Mario on Mobile.
One thing I've learned about stocks, is that mass panic rules the roost. All it takes is for a few selloffs to occur, then a few traders panic and then start selling off their stock, and before you know it everyone's rushing to sell their stock without even understanding why they're doing it.
Then shortly after, a correction occurs as people realize that only 6% of the price drop was actually justified.
Same reason massive bull markets climb out of control. People see the stock rising and, without thinking, everyone jumps on the bandwagon, which increases demand and drives prices even higher, and the bubble just keeps on growing, until the inevitable pop, and all those people who bought it at the peak lose money.
But I say rightfully so. You're supposed to buy when it bottoms out, not when it's peaking at the top of a bull run. And all the bandwagoners deserve to lose their money, or at the very least they have no one to blame but themselves. Likewise, all these people who sell off in the hysteria of a bear run, they deserve to sell at a loss, or at the very least have no one to blame but themselves when it bounces back.
I’m a buying some shares...
Just look at Nintendo’s IP. Look at the number of games per console Switch owners purchase. It’s all golden from where I’m sitting
@Pod Yuuuuuuuuuuuuuuuuuuuuuuuup.
Players might think "You're right, Nintendo need to improve it's online infrastructure!"
But Nintendo could do that and not charge money.... all investors would be seeing is "Why don't you charge money like Sony and Microsoft? What folly is this, you'll clearly fail!".
@JaxonH I recall someone mentioning about how they were in an Economy class and a student at some point, because the teacher was talking about so many things except that one thing and asked :
"But what about the stock market? You've not said a word about it."
The Economy teacher, who was a economist with apparently a ton of experience just glared a the student and basically went:
"If you learn to talk about success on the Stock markets, you shouldn't be taking an Economist course.
You should be taking a course in -Psychology-."
Which said everything the teacher, an economist by profession, thought about the subject.
@Ludovsky
Ha! I like it. So true though.
Look at how economic uncertainty gets priced into gold. Most of the short term variation comes from speculation, be it fear of political events, uncertainty with regard to Fed rate increases- even despite statistical data supporting just as much positive correlation with rate hikes as negative correlation... screw what the data suggests though, right? Urban rumor claims rate hikes damper gold prices, and everyone takes it as gospel, even though it's just as likely to move up in tandem with interest rate increases as it is to go down.
It's a mess. I'd say 2/3 of the price of any given stock, commodity or asset is real value. The remaining 1/3 is all priced-in speculation. And in bouts of hysteria, that speculation can bubble out into the stratosphere (and what goes up, always always always comes crashing down)
@electrolite77 I'd really like to see more aaa third party support, I know that sounds obvious but the likes of diablo and a 3ds upgrade of monster hunter really aren't gonna cut it for me. Some fallout and doom 2 action / or some kind of far cry assassins creed would be good, even if they are ports of older games
@KingdomHeartsFan The estimate on xbox one sales is 30 mil in the high side, so not 30-40 mil: https://en.wikipedia.org/wiki/List_of_best-selling_game_consoles if the wiki is wrong update but that number stands as the current acceptable quantity sold. also if you don’t care about the switch being on pace to outsell the ps4 then you don’t know how stock analysis works, it’s very important to recognize potential sales when trying to predict the future price of an asset. if you want to chose to keep your little anti-nintendo attitude then by all means go for it.
@KingdomHeartsFan actually depending on where you get the readings from will depend on the number you get, and some most definitely say 15mil on the low side. i chose to give you the benefit of the doubt and post a more trusted source. but let’s not forget in both cases you were wrong. also i could really care less if you believe me, you’re obviously not an investor and those that are will do exactly what i said because it’s the standard.
@JaxonH Yeah, it's why I don't feel like it's giving too much weight to these claims to be honest.
Recall it was people coming out the sector of invedting/finance/hedge fund management(iirc) who basically managed to tank something like Sears of all things.
Truth be told I'm with investors on Nintendo's online service. It will most likely fumble out of the gate despite having more than 10 years to learn from the competition, especially sincr Nintendo baffling thought it wad a good idea to tie voice chat to a mobile app instead of the console itself
@KingdomHeartsFan dude do 2 seconds of googling on how to price a company. in fact start here: http://guides.wsj.com/personal-finance/investing/how-to-evaluate-a-stock/
also shut up with the fanboy crap, i’m a gamedev, i literally own all modern platforms atm
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