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Nintendo’s OLED switch model has apparently not challenged investors (Image: Nintendo)
After a 2020 that combined global challenges with a spectacular boom in its business, some of the narratives about Nintendo’s prospects and current value are starting to shift. The past fiscal year has brought unique benefits to the company as a significant number of people looking for home entertainment while amid the daily constraints Animal Crossing: New Horizons was – among other publications – a great success.
That boom is, of course, subsiding as Nintendo, and indeed most entertainment companies, admit that sales and profits will decline as demand falls. The company’s stock price and its investors naturally respond to lower sales and earnings projections, even when the company is in robust shape.
That feeling of losing momentum is reflected in Hirotoshi Murakami, an analyst with Mitsubishi UFJ Morgan Stanley Securities and currently the only analyst consulted by Bloomberg to sell Nintendo shares. They have been among the lowest share price targets for Nintendo in particular in recent years, although the release also highlights that “Cathie Wood’s flagship Ark Innovation Fund has reduced its stake in Nintendo every week since mid-July.” Investors sell in anticipation of continued declines.
The reasons for these assessments are varied – persistent manufacturing supply issues, increased competition from new hardware, “disappointment among investors with the company’s upcoming switch console update” and the aforementioned declining overall consumer demand.
However, for the sake of balance, it should be noted that some are anticipating a rebound, thanks in part to Nintendo’s recent share buyback and the expectation that when Nintendo finally announces a “new generation” of hardware that will inevitably revive interest.
All of this is relative, of course. Nintendo still sells a lot of hardware and games, has a big Mario movie on the way, along with a number of products and projects. Estimated gains, while below last year’s boom, are still sizeable.
However, updates like these and the recent downtrend in stock value are a reminder that Nintendo needs to maintain its hard-earned Switch momentum and perhaps avoid the pitfalls of the past when it came to DS / Wii. went success for the relative battles of 3DS / Wii U.
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