Nintendo (NTDOF) shares fell sharply after the company said the much anticipated successor to its Switch console would go on sale later this year, disappointing investors with a lack of specifics and a design that feels more like an update than a reinvention.
Shares had closed at a new record on Thursday ahead of the Switch 2 announcement, building on the 26% gain last year amid growing expectations for the new hardware. On Friday, the stock fell as much as 7.2% before paring losses to close 4.3% lower at 9,181 yen, equivalent to $59.15. That was its biggest one-day percentage drop since end-September.
The Japanese videogame maker said late Thursday that it will start selling the successor to its nearly eight-year-old hybrid console in 2025. Nintendo didn’t reveal the price, the launch date or specifications but said it plans to share further details in April. It also said the new Switch will come with exclusive games.
A brief video preview of its next-generation hardware appeared to show a larger screen, a new button and magnets for more easily removing and reattaching its Joy-Con controllers.
Tomoichiro Kubota, senior market analyst at Matsui Securities, said investors are taking profit for now because the company failed to announce key details such as the launch date, the price and software plans. “Without these details, you can’t establish earnings forecasts,” he said.
The first Switch launched in 2017 and sold 146 million units as of September. It was a runaway success for the Japanese company, which has had a spotty record with hardware, but sales of the ageing console are now firmly in decline.
In November, Nintendo cut its forecasts for Switch sales and revenue for the year ending March after disappointing first-half results.
The Kyoto-based company’s challenges in shoring up earnings without a new console also come as the videogame industry is struggling to regain its vigour following a pandemic-driven boom.
The Japanese videogame maker has been diversifying its revenue streams with some success, offering other forms of entertainment by leveraging its popular characters and game series. It recently launched a mobile app that lets users download and stream game soundtracks. Plans to produce new films based on the “Super Mario” and “The Legend of Zelda” game series are also underway.
