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Why Nintendo’s stock price falling

Nintendo Headquarters Building

In the last few months, beginning during the lead up to E3 2018, Nintendo’s stock price has taken quite a big fall, causing a drop by about a quarter of the stock price worth prior to the decline. Industry analysts have been trying to understand the cause for this dramatic drop in investment for Nintendo, but can’t seem to pin down the exact reason. This may seem especially unusual now since Nintendo’s the two main competitors, Sony and Microsoft are currently enjoying excellent results with their stock prices.

Some thought that Nintendo’s lack of E3 announcements might have spooked some investors into jumping ship, taking the lack of announcements as the sign of yet another dying console from the company. However the Nintendo Switch is performing incredibly well for the company, and is on track, so Nintendo say, to reach 20 million sales by the end of the fiscal year. Just this week Nintendo also told press that they have more unannounced games releasing for the Nintendo Switch in 2018.

Another issue that investors might have with Nintendo is the lack of third-party releases. Traditionally Nintendo consoles have had games that are mostly first-party, with titles such as Pokemon, Super Smash Bros, and Metroid Prime filling the roster. However, Nintendo is already working to bring more third-party titles to the Switch, with Bethesda releasing both Wolfenstein games, Fallout Shelter, and Skyrim for it already. FIFA 18 and a number of other titles have also made it to the Switch, with many more planned for the future.

Third-party releases are a big indicator for console success to some investors, usually western ones who are far more likely to jump ship as soon as possible if they suspect a company is underperforming. With games such as Call of Duty: Black Ops 4 and Red Dead Redemption 2 not confirmed to be releasing for the Switch, it may have put some investors off enough to move away from the company.

The final possible cause of Nintendo’s large stock price drop is their upcoming earnings report, due on July 31st. It’s clear that this year the company will be posting figures which are down on last year, but this is mostly because of the incredible titles launched in 2017. The Legend of Zelda: Breath of the Wild and Super Mario Odyssey are two titles that sold in large numbers last year, but nothing has released for the same period this year that will even come close.

Earnings numbers are again an indicator for some investors as to when the time is right to leave a company behind. Logically it seems like the earnings report and lack of third-party titles would be doing the most damage to Nintendo from the investor’s point of view. However, a lack of announcements, given the poor sales and failure of the Nintendo Wii U, and poor showing at E3 could also have some backs up regarding their views of the company and the future of the Nintendo Switch.

The reality is that the Nintendo Switch fills a gap in the market many gamers have, the second console gap. Since the Switch is portable it’s easy to bring along to use while travelling or to take to play with friends. What the Switch currently isn’t competing on is the placement of big titles such as Red Dead Redemption 2. However, players seem more than happy with the games they get, and with Nintendo planning 20-30 eShop releases a week in the future there will be more than enough titles for anyone to get stuck into.

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