Nintendo recently announced that component shortages could lead to some production issues causing the company to forecast conservative profits for this year. This announcement caused shares of Nintendo to take a fall on May 6th.
On Friday, shares in Nintendo Co. fell by as much as 3.1%. This could result in a 6.4% decline for the year long-term.
“There has been considerable stock market pessimism about Nintendo’s longer-term prospects,” writes Citigroup analyst Kota Ezawa. “The possibility is emerging of positives finally drying up.”
Nintendo reported hardware sales improved by 37% while software sales went up 37% to 231 million units over the last fiscal year. It also increased its proportion of digital download sales to 43% from 34% in 2020.
The Profit‘s Take:
Chip shortages have affected all hardware manufacturers in the gaming space. These shortages were the result of a perfect storm of a huge increase in demand combined with a tightening of supply due to the pandemic. It would have been interesting to see how much bigger 2020 (and 2021) could have been from a console and gaming PC sales perspective without these component constraints.
(All information was provided by Bloomberg)
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