Saturday, October 23rd, 2021

Nintendo’s share price continues to decline as major investors are reported to be “dump” shares

Image: Nintendo

It’s not always at the top of everyone’s list with fascinating game news, but this year was a year of considerable activity centered around Nintendo’s stock price. Not surprisingly, the surge in demand for game entertainment has boosted the company’s value along with its 2020 profits. The opposite is happening in 2021 as that demand recedes.

Nintendo made major buybacks and stock revocations in August and September, which usually pushes up stock prices, but stock prices continue to fall. This week, for the first time this year, it fell below 50,000 yen per share. This is likely due to a large sale by Cathie Wood and its Ark Innovation ETF trading company. Bloomberg.. Ark has reduced its stake in Nintendo since late February. The value has consistently declined during this period, decreasing by 28% during that period.

Bloomberg also emphasized that CLSA Securities Japan analyst Jay Defivo gave Nintendo shares a sell rating last week, dropping two steps from “buy” to “underperform.” He said Switch was “on the verge of a slowdown in the next few years,” and reportedly expects profits to continue to decline until 2024.

It’s tempting to dismiss this kind of story, but the reality is that it’s important to Nintendo as a business, and senior executives are at least closely watching investor trends. In addition to the 2021 sales plunging into the 2020 boom, the new OLED model is arguably a minor, with the conviction that Nintendo needs bold moves to expand and grow its business. Some analysts were disappointed with the upgrade.

Nintendo's stock price falls sharply annually
Nintendo’s stock price falls sharply annually (image: Bloomberg).

There are many challenges in the market, but we can argue that it’s not as easy as pushing out new, more powerful systems and seeing sales grow. Global industries and manufacturing are still working on varying degrees of global COVID pandemics. In addition, there is a well-known ongoing problem of chip shortage. As Sony and Microsoft learned on the PS5 and Xbox Series X | S, it’s very difficult to meet the demand for popular new hardware.

The company’s stock price seems to fluctuate with the seasons, but there is no doubt that investors’ confidence in Nintendo is currently swaying. It’s interesting to see what the company is doing to make profits in the medium to long term and please its shareholders.