After a 2020 that combined global challenges with a spectacular boom in its business, some of the narrative around Nintendo's prospects and current value are starting to shift. The last financial year brought unique benefits for the company, with significant numbers of people seeking home entertainment in the midst of day-to-day restrictions, while Animal Crossing: New Horizons was - among other releases - a huge success.
That boom is dropping away, of course, with Nintendo and indeed most entertainment companies acknowledging that sales and profits will fall back as demand declines. The company's share price and its investors naturally react to lowered sales and profit projections, even if the company is in robust health.
That sense of momentum being lost is reflected by Hirotoshi Murakami, an analyst for Mitsubishi UFJ Morgan Stanley Securities, and currently the only analyst consulted by Bloomberg to give 'sell' advice for Nintendo's stock. They have notably often been among those with the lowest share price targets for Nintendo over recent years, though the publication also highlights that 'Cathie Wood’s flagship Ark Innovation Fund has reduced its stake in Nintendo every week since mid-July', so there are other investors selling in anticipation of continued declines.
The reasons for these assessments are varied - ongoing manufacturing supply issues, increased competition from new hardware, 'investor disappointment in the forthcoming update of the company’s Switch console', and the aforementioned declining overall demand among consumers.
For the sake of balance, though, it's worth noting that some expect a bounceback, partially thanks to Nintendo's current buy-back of shares, and the expectation that when Nintendo eventually announces a 'new generation' of hardware that will inevitably revive interest.
It's all relative, of course. Nintendo is still selling a lot of hardware and games, has a major Mario movie on the way, along with an assortment of products and projects. Its estimated profits, while down on the boom of last year, are still significant.
Updates like this, and the downward trend of share value in recent times, do nevertheless serve as reminders that Nintendo will need to push to maintain its hard-earned Switch momentum, and perhaps avoid the pitfalls of the past when it went from DS/Wii success to the relative struggles of 3DS/Wii U.
Let us know what you think of all this, as always, in the comments below.
[source bloomberg.com]
Comments 81
Nintendo's share price has been comically low since about January 2018, when it was apparent Switch would continue to sell well and Nintendo management was moving the company in a good direction. But this goes to show you that people can't separate their head from their heart with Nintendo.
I don’t really give a scooby doo about share prices but it would surely make sense that they would drop now, considering that Covid has had a positive effect on sales of video games and consoles. Not that it’s exactly over.
So you're telling me its on sale? Nintendo stuff never goes on sale!
What's Pachter been up to recently?
It's all over, I knew this day would come. Nintendo is gonna close.
That's surprising as the Switch still seems to be selling quite well. However, there's no denying that there's not really any "big sellers" on the horizon. I know we have metroid dread but tbh, that's not going to hit the highs of the other big switch games.
It's just a natural economic trend due to circumstances together with sales in recent years. Everything is still healthy with the company economically in part thanks to the Switch in recent times. As kind of stated, it's probably due to a combination of factors but I would shrug my shoulders at this tbh.
The biggest reason for the drop in confidence is the lack of a true system-moving first-party title on the level of a BotW 2, Zelda 35th Anniversary, or Mario Kart 9 for the 4th Quarter, not to mention the completely underwhelming Switch OLED model. I was hoping Nintendo might announce a surprise "AAA" first-party game this week during Gamescom, but it's looking less likely now.
While obviously 2022 looks to be much more promising, the problem is that Sony and Microsoft will also have a plethora of long-delayed games hitting the market as well. Nintendo may well miss the last great opportunity for the Switch to truly dominate Christmas sales figures before the competition...and the sheer disparity in hardware power...becomes too much to ignore.
Time to buy the dip!
Interesting note: If Nintendo's share buyback is on going, and the share price is down during the buyback, that just means Nintendo will complete the purchase under-budget, which is a good thing for the company.
@AtlanteanMan I get the feeling switch will still dominate holiday 2021, but it may be its last. Their offering this year, while not as good as previous years, still contains a mario party, a pokemon game, and a new model. Factor in sony literally having nothing to show this fall should help too. Surprisingly, it's Microsoft that has a few heavy hitters this year. When's the last time that happened?
@dequesi I don't know if Nintendo trends keep going the way they are, they'll probably release the Switch U and add blutooth and call it a day. I'm going to buy nintendo stocks whenever they fail another console launch.
If you look at the graph, it all started going down when the Direct dropped, so it shows that Nintendo is not trying hard enough anymore.
Sorry the the OLED version is an the upgrade anyone wanted, bigger screen built in LAN, still has drift, whoopie!
The the only big announcement was Metroid which, I'm sorry to say, is not one of Nintendo's well loved series.
They need to step up their game and announce some other games.
Investors like trends. So here's a totally made up one.
Since the Gamecube, their home consoles have flopped, flourished, flopped, flourished. So. Sell now to avoid their next console...and buy later anticipating the one after that!
Easy money.
(Disclaimer - I am not qualified in market analysis in any capacity. Ignore me.)
@AtlanteanMan there's too many other factors to consider. Sony and Microsoft are having a hard time keeping their new products in stock since retailers are losing their battles with scalper bots. Also, component shortages would put a Switch hardware revision (Switch Pro or 2) in the same boat where scalpers will just snipe them before the consumers will buy them. In essence, Nintendo is kind of stuck in the situation we're in across the world. They were in that boat with the Wii and they saw huge sales, but a poor user base which affected 3rd party software development. The PS5 and Xbox Series may be selling very well, but over half of 10 million sold could be sitting on scalper sites or listings.
Not surprised shareholders are taking this route because they care about one thing: their money. They wanted a safe bet for software, but Nintendo is still operating as they always have done: if it isn't ready, don't announce a date. Which I appreciate. Shareholders don't dictate to my wallet and I'm still buying an OLED model since I play mine in portable mode. When they announce new hardware, I will buy it too. Shareholders do not reflect the buying audience, they've been wrong before too.
Consumers are still going to buy the Switch this holiday season regardless of its "power gap."
@dequesi Best time to buy is when people are leaving it. You'll reap the reward when they do well the next time.
This means its going to be a good purchase soon.
Makes sense to me. The OLED console isnt at all what consumers wanted and right now there is really only 1 or 2 games people care about that. Metroid and Mario Party.
really wish non-gaming investors, and myopic venture capitalists, would be driven out of the video game industry.
@GrailUK you're not wrong though
It’s amazing how many stock analysts we have on this website.
I’ll just treasure my single share of Nintendo stock and maybe buy a second one some day.
As I said before, many Japanese investors got high off of last year's pandemic lockdown + Animal Crossing-fueled sales and expected a near-exact repeat for this year.
I really don't understand what the company share price has to do with Nintendo Life. I thought this website was to discuss gaming news and not the corporate affairs of Nintendo. What's next? A detailed analysis of the company's financial statements for the year?
It's going to be hard to duplicate the perfect storm of profit that was 2020 for Nintendo, and video games in general. In my mind, this is a natural regression back to the average. Nintendo is still putting out good stuff - that's all that matters to me.
Don't forget the last major prediction from Bloomberg about Nintendo was waaay off!
@spacemoe505
I would assume the reason is that the financial endurance of Nintendo as a company has a direct impact on the quantity, quality, and continuity of Nintendo games and consoles.
All the shovel ware on the shop. Playing MK8 for almost a decade. Getting Game Pass. Oh and now that I've experienced falling off a cliff because of the drift. I would say hearing this sounds about right.
I bought a Nintendo share because it is cheap now
@marandahir sure, but I don't think the authors are the appropriate commentators on the financial performance of the company. I have a handful of Nintendo shares and the company has been issuing fairly generous dividends over the last few years, explaining the "deflated" share price to a certain extent. The suggestion is that we leave certain commentary to the experts and instead focus on the main reason people visit NL i.e. gaming news.
With everything going on in the world, it's no surprise. It's still hard to find any console in my areas. PS4, PS5, Xbox One, Xbox Next, Switch and even 3DS. Even going into the vintage game stores, you can't even find any older consoles. Other than that, the games will start pouring out soon...Nintendo has a lot lined up towards the end of the year and who knows what's in store for 2022. I'm thinking investors aren't too confident in the new switch model, probably wanting nintendo to create a brand new console, which I'm sure nintendo is already onto making (if not, already). Other than that, who really cares...nintendo is doing fantastic with the switch.
@Chandlero just one? EEK! How much are they each?
Sounds like investors are whining over their wrong prediction of the switch pro
@GrailUK One share is around 400 EUR.
@Chandlero Whoa! Hey. good luck on your share
Covid gave switch a huge sales but 2021 was pretty lackluster imo. The only big announcement was a 10 year old port and Oled model no one asked for.
Nintendoomed! Everyone get ready for the big going out of business sale! Those analysts sure like to give Nintendo a hard time. I know it's just killing all of you that the switch OLED is what everyone was so sure would be a switch pro. That'll teach you to put one bit of faith in internet rumors. Haven't we learned how the internet rumor mill works by now?
@dequesi Bring extra.
Market correction. Pokémon and Animal Crossing were driving abnormally high income streams last year, and obviously those boom times were never going to last in perpetuity.
@spacemoe505
They actually do this quarterly. Knowing financial data of the company is important to some of us. Also, Nintendo keeps a tally of the top-selling games on each console, which is pretty cool.
@nukatha https://www.bloomberg.com/quote/7974:JP
https://www.nintendo.co.jp/ir/pdf/2021/annual2103e.pdf
https://www.nintendo.co.jp/ir/en/library/earnings/index.html
I have attached a couple links that should be useful. I would suggest browsing Nintendo's Investor Relations website.
@nukatha tH3y 4cTu4llY d0 Th15 qU4RT3rLy
@nukatha
The classic "I don't like hearing negativity about my favorite corporation"
@Narrator1
Pokemon was definitely not driving Switch sales last year as no Pokemon games were released in 2020.
It will drive Switch sales this year with the launch of Brilliant Diamond/Shining Pearl, Unite, and New Pokemon Snap (and Legends Arceus for next year).
@Fangleman32
Lol, I'm a shareholder. When ninty does well, I get a nice dividend payment.
@spacemoe505
I read those reports top to bottom whenever they come out. (The Nintendo-published ones, not 3rd-party analyses if them).
Not a concern to me because I'm not an investor. Nintendo's gonna keep making content.
I will say though, it was to be expected that the OLED model isn't impressive. An "upgrade" that costs more to upgrade (because you won't get 100% of the money you paid for the console) than just buying QoL-improving accessories on the LCD model.
How handy, given the Boards intention to buy some shares back soon. Nice bonus.
Nintendo stock were most likely overvalued due to a combination of record breaking profits during the covid era and expectations of a switch pro.
But be realistic, while switch sales are still really healthy, they've most likely peaked out.
Nintendo is almost out of Wii U games to port and without it they can't keep up their pace of releases.
Competition getting way ahead in terms of power, making it harder to port modern games to the switch without making bigger and bigger sacrifices.
I'm not sure how long Nintendo wants to milk the succes of the switch but at some point they have to move forward. Looking back at Nintendo's track record there is gonna be a big chance their next console is gonna be a big failure.
It's over for Nintendo
This clearly signals the death of Nintendo, you guyz!! /s
@Bunkerneath,
I think the OLED model may have not been what the core minorities wanted, but with the official reveal trailer having 11.5 million views, with far more likes than dislikes, I would say the mass market is more than happy with it.
As for share prices, the global pandemics restrictions ending for a lot of people, and the fact they will be back at work has has the biggest effect.
@dBackLash,
So basically Nintendo had a record breaking quarter when Animal crossing released and the console sold 5 million units, a feat only two consoles had managed before this, the Wii and the DS.
However Nintendo still managed to shift 4.5 million consoles in the same period this year, which is still an amazing result that pretty much beats all other consoles, so not getting all the negative spin that Nintendo is doomed on here, however it's not all that surprising.
Nintendo is not doing as exactly I want, so basically the Switch is finished, when in reality it will pass the Wii's total by January 2022, and will have a shot at reaching DS and PS2 numbers.
@Faucet,
Yes Mario kart 8 is totally not what 36 million people wanted, and I can't move in my local town for protesters waving joy con drift placards.
How have we developed a system where the value of a company is largely determined by some people's opinions of it?
@carlos82,
True, and opinions that are very fickle.
@dBackLash Oh yeah! Covid really gave Nintendo a huge boost, one of the biggest. The wave was not going to last forever though.
I think some people are being overly defensive however. No one is saying Nintendo is doomed. It is what it is. They will survive just fine, so the people up in arms should really chill.
Nintendo stopped making new first-party games since end of 2019. It is almost 2 years of remasters, ports and updates. I thank the investors for doing their part.
@johnvboy not saying the switch is finished, it is still selling really well. But I doubt it can keep up the momentum from last year while the world slowly goes back to normal and the PS5/XboxX/Steam Deck starts to become readily available.
And looking at the stock prices, investors tend to agree.
Corporate share buy-back should be outlawed. Completely arbitrary inflation of value. I know Nintendo is just taking part in standard practice, but it's sad to see all the same.
@dBackLash,
Investors are not always correct, the Switch has great momentum, with a brand new model out in October, plus those very big Pokemon releases coming as well.
This is what happens when you announce a drab, boring Switch OLED with the same stale architechture that was aging badly back in 2017. When instead, Nintendo could have announced a Switch Pro OLED that could handle 4K 60fps when docked and 1080p 60fps when in handheld mode.
I mean it could still happen if Nintendo gets a new Lovelace SoC from Nvidia in time for next year. That would definitely raise stocks. Another thing that would have helped would have been to release Wind Waker HD and Twilight Princess HD for the Switch. Then the year after bring out Ocarina of Time HD and Majora's Mask HD. Then top it off with Mario Kart 9 and Metroid Prime Trilogy HD
After a pathetic 131 year run, Nintendo is doomed. Pachter nailed it.
I think Nintendo's bubble has burst. The bubble got as high as it could and Nintendo have had a good few years but it's now downwards and onwards.
@Ravenmaster
I like how you are disappointed that Nintendo didn't announce a monstrously powerful Switch Pro (using an unannounced next-gen Nvidia GPU architecture that none of current the RTX 30 series cards even use) just so you can use it to play a bunch of HD Zelda and Metroid ports.
@johnvboy
Nintendo was running at 50 mph before Animal Crossing/Covid, started running at 100 mph once Animal Crossing & Covid lockdowns happened, and are currently running at 80 mph now that Animal Crossing is old & Covid lockdown end have ended.
Investors are disappointed with the 100 mph => 80 mph drop-off, without looking at the bigger picture.
As a side note, I'm humored by the thought that people actually think the Steam Deck will be a mainstream gaming device that goes toe-to-toe against Switch, PlayStation, and Xbox. Some people really do think hardware specs = sales, despite decades of evidence to the contrary.
@westman98 Maybe it won't be, but atleast now gamers will be able to play their entire game library without severe sacrifices due to limited hardware like the switch.
But hey, atleast Nintendo still has those upcoming 1st party games coming out sometime in 2022. For now ther'e Skyward Sword and Metroid! WOOHOO!
@Fangleman32
Cool, nobody was denying that the Steam Deck is more powerful than Switch. Doesn't go against anything I said.
And if you ignore all the non-Skyward Sword and Metroid games coming to Switch in 2021, then I suppose all the Switch has is Skyward Sword and Metroid 🤷.
My issue with Nintendo's strategy of growth for it business is their complete lack of understanding & unwilliness to implement a robust online service. Honestly 2 companies have come into the game market much later and handed Nintendo their asses every hardware cycle since xbox live first hit, that's nearly 20 years ago. It also doesn't thrill me that their senior Japanese executives seem to favour IP Nintendo hold over other offerings.
The recent share buy-back announcement was a catch-22 for Nintendo, they have a huge amount of cash which they'll use to increase investors value in the company. Which is fine for investors but that also revealed to the market they have no plans to grow the company in new area's or double down on area's they suck at (online services). Nintendo really can become a huge company like Disney has in recent years if they leverage their IP right and explore new ways to earn revenue consistently. That's a huge risk for them and they're waiting for current risks to pay off like Super Mario theme park and the in production Mario movie. People don't realise how big the Super Mario theme park can be for Nintendo, game sales are usually lower in Summer months of the year so why not use Mario to get people's money another way.
@westman98 I always love how people around here think the reason for a share drop is down to pixels and frame rates and power. Blinkers/sheltered lives etc...
Nintendo has been too comfortable for too long. Time for some pressure which leads to good innovation...Oled Switch is the lamest thing for a leading console maker and developer (personal opinion...no fanboys attack needed)
The lockdowns last year caused sales to be inflated, and it warped the projections of a lot of companies. If there's one thing I'll except companies blaming sad lockdowns for, it's business either being hampered or growing abnormally at the time.
Assuming that anyone actually looks at sales projections with basic knowledge of what sells, I still think jumping off now is premature. Maybe if the investor is clueless and only considers what they're told about power, but Switch has a solid install base and a good number of games launching up until 2022. Sales have sputtered, but there's precedent that they'll possibly spike and regulate after the OLED model comes out. There aren't any major signs that the Big N's value will collapse.
Sony and Microsoft aren't even bothering trying to compete directly with the big N, and frankly, aren't yet big enough to be a major concern. Worst case scenario, Nintendo's in a good position to have the Switch gracefully bow out to be replaced by a successor by 2023.
@WiltonRoots,
Some on here and other sites feel they could run the business better than Nintendo, always makes me laugh when they push for low selling franchises like Pikmin etc.
@westman98,
So true, Nintendo and the Switch are in great shape.
I am not going to look the figures up for this but I am pretty sure that Nintendo made lots of money from hardware and software sales in the recent time. So much money that people seem to think they need a pro upgrade and a list of games that only god could have thought up.
Let's be honest Nintendo have done a pretty good job of drip feeding software in order to drive console sales , so I don't think they need to worry about a dip in the share price.
@johnvboy
Yep, Switch is only tracking behind the Nintendo DS as the 2nd fastest-selling game platform of all time. But investors desire non-stop growth, which has definitely stopped for Switch, so Nintendo's share price has taken a beating.
Sony and Microsoft have been able to whether the storm of declining hardware sales by relying more and more on recurrent in-game monetization, particularly from big 3rd party titles (i.e. 1/3rd of PlayStation revenue in 2020 came from MTX/lootboxes/battle passes). That is largely missing from Nintendo's business model as most major Switch games don't have much if any recurrent monetization.
@westman98
Tell me again how you don't want Zelda to look this good: https://youtu.be/L_Qmig8nf3A?t=53
@Ravenmaster
That's a full blown remake, not Ocarina of Time HD.
(Also, I personally think the visuals in that fanmade demo looks bland, despite the high resolution and frame rate. It reminds me of those "Here's Mario in Unreal Engine 4, please hire me Nintendo" videos. IMO the 3DS remake running on an emulator looks more appealing - at least it retains some color variety.)
Well no point in carrying on this conversation. Hipsters gonna hipster.
@IronMan30 Switch is dead.
@johnvboy Switch is dead.
There's something also to be said about the ecological value of NOT going for the most powerful, energy-consuming hardware.
Switch might be based on decade-old hardware by now, only slightly more powerful than an Xbox 360, but reduces the number of systems a given family has in their home (one console instead of a console and a handheld) and it uses vastly less electricity resources than the Xbox Series X and the Playstation 5.
Nintendo's corporate environmental commitments are piss poor compared to Microsoft's, yes, but Nintendo's hardware alone is a better investment BECAUSE it delivers high-quality games without needing to always have the best graphics money can buy.
When will graphics be good enough? How long can we ecologically sustain more and more energy-consumptive hardware? At some point, we need to plateau or make a managed retreat, and say that we don't NEED better graphics; fun doesn't require them.
I'm all for a Switch Pro if it can solve the stability issues, mind you. But I'd far prefer a stable console with amazing game experiences based on old hardware than continuously trying to push hardware to its limits and face stability issues because the graphics were too good for the ancient hardware, or continuously trying to race to an impossible finish line of "more realistic" graphics.
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