Nintendo shares plunge on delayed Switch 2 launch

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Nintendo delays Switch 2 release from late 2024 to early 2025, causing an 8.8% stock drop. Investors anticipated a 2024 release. The delay affects software launch timing, potentially impacting revenue. Analysts foresee possible buying opportunities amid stock decline. According to reports, Nintendo has informed its game distribution partners that the release of the next-generation video game console, Switch 2, will be delayed from the last quarter of this year to the early months of 2025.

This news led to an 8.8% drop in Nintendo’s stock price in Monday’s early trading on the Japanese stock market, marking the largest single-day decline since October 2021. Nintendo typically releases a new gaming console every five to six years, and the company’s stock price is highly influenced by its new hardware. However, the previous generation gaming console Switch has been on the market for seven years, and the release timing of Switch 2 has become the top concern for all investors. Last week, Nintendo’s stock price reached a historic high as investors expected the company to launch Switch 2 in 2024 to replace the original Switch.

However, with expectations dashed, more investors may exit, leading to a further decline in Nintendo’s stock price.

Mio Kato of LightStream Research stated, ‘If the key new console is delayed for release amid the ageing of the current version, Nintendo’s financial data for the next fiscal year (ending in March 2025) may be quite dismal.’ Also read: Gaming’s big tech future: How the tech giants are reshaping the industry The release timing of related game becomes uncertain The delay of Switch 2 not only affects Nintendo’s hardware revenue but is also expected to impact the release timing of its related game software, further dragging down Nintendo’s income.

Tokyo-based video game developer consultant Serkan Toto stated that software is Nintendo’s most profitable business, but it is unlikely to release new generation game blockbusters like ‘The Legend of Zelda,’ ‘Mario,’ and ‘Splatoon’ before hardware upgrades. After announcing the performance this month, Nintendo President Shuntaro Furukawa avoided questions about new hardware, only saying the company will announce plans for the next fiscal year after the end of this fiscal year, which ends in March of this year. Furukawa also added that selling more existing game consoles will be a challenge.

There will be a daunting task for Nintendo’s revenue growth Currently, Nintendo has sold 139 million Switch units worldwide. If Nintendo fails to launch Switch 2 during this year’s holiday sales season, it will have to rely on the old Switch to compete in the market against the updated and more powerful consoles released by Sony and Microsoft, which is clearly a daunting task. However, Bernstein analyst Robin Zhu believes that some investors may see further declines in Nintendo’s stock price as a buying opportunity. He expects Nintendo to announce news of new hardware release within the next six months.