News Profit's Takes

Nintendo Stock Takes A Dive After Issuing Chip Warning

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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