Nintendo share price sees steepest drop in two years after earnings report

Nintendo’s stock price fell 8.8% on Friday, the biggest daily drop the company has seen since February 2019, Bloomberg reports.

The drop comes despite a seemingly positive earnings report shared yesterday; While Nintendo’s profits are declining year over year, which is to be expected after last year’s pandemic boom, sales have remained strong. Indeed, Nintendo said it was in “such a favorable cash flow position” that it planned to spend up to 100 billion yen to buy back and cancel some of its own shares – a move that would typically see a to reinforce in stock, rather than the other way around.

So why has Nintendo’s stock dropped so dramatically? Bloomberg suggests that there might be concerns that demand for games may decline as the world slowly emerges from the pandemic, also pointing out that semiconductor shortages are still affecting Switch production. Hideki Yasuda, analyst at the Ace Research Institute, shared the following:

This quarter’s games weren’t enough to fill the gap left by Animal Crossing. July market data shows that both Switch and Switch Lite sales are down. Nintendo will have another tough period ahead during the month. July-September quarter, which could be worse than the April-June period. “

Whatever the reasoning, the numbers don’t lie. Here’s a Bloomberg chart comparing shares of Nintendo, Sony, and Microsoft over the past few months – it looks like things have been going steadily down for Nintendo since the Switch OLED model was announced.

During yesterday’s report, Nintendo revealed that Switch sales have now exceeded 89 million units, and also provided an updated overview of the best-selling Switch games of all time.