Investors Worried about Switch 2 Sales, Nintendo Shares Fall 11 Percent

Nintendo Switch 2 (photo: dok. Nintendo)

JAKARTA - Nintendo shares fell sharply by 11 percent on Wednesday, February 4. This decline occurred because investors were worried about the momentum of Nintendo's latest console sales, the Switch 2.

Even though year-end holiday sales are strong, the market assesses that the console's performance has not reached an extraordinary stage. Investors feel that Switch 2 still lacks big games that can drive demand for the device.

Nintendo is still maintaining its annual net profit forecast of 350 billion yen ($2.9 billion) this year. However, the figure is still below analysts' expectations, which are expecting higher profits.

Around 27 analysts surveyed by LSEG forecast profits of 406 billion yen ($3.5 billion) thanks to the arrival of the Nintendo Switch 2. However, since Nintendo shares hit record highs last year, public enthusiasm has cooled.

"The results were good with (the presence of Switch 2) breaking records, but not exceptional," Jefferies analyst Atul Goyal wrote in a note, quoted via Reuters on Wednesday, February 4.

Several experts also highlighted that the Switch 2 has not been able to sell as much software as its predecessor in the same period. In addition, problems such as the rise in memory chip prices also cast a shadow over the company.

If the increase in component prices continues, Nintendo's profits are predicted to be further depressed in the coming fiscal year. Although Nintendo stated that the impact of the cost increase has not been felt, they remain vigilant about changes in parts prices.