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Nintendo Stock Plummets Following Impressive Earnings Report

UTC by Godfrey Benjamin · 3 min read
Nintendo Stock Plummets Following Impressive Earnings Report
Photo: Unsplash

Investors are bullish on Nintendo Stock following the gaming giant’s Q1 earnings reports with a 428% boost in revenue.

Nintendo Co Ltd (TYO: 7974) stock is coasting towards the moon following the firm’s Q1 428% boost in revenue. The company’s revenue increase can be attributed to the gaming boom experienced during the global lockdowns.

The stock market has started responding to the impressive figures from Nintendo as the stock gained 2.58% adding 1,270 JPY. The gain in the past 24 hours is significant based on Nintendo’s share price, currently at JPY50,460 (USD477.48).

Analysts are divided between Nintendo stock’s current and future outlook following the huge jump. Atul Goyal, a managing director at Jefferies, has a “hold” rating on Nintendo’s shares. Before the firm’s Q1 earnings were released, Goyal told CNBC that he expects sales of Switch to peak next year. “I ran with (Nintendo) as in buy, highest conviction buy alongside Sony for the last five years”, – Goyal noted but claimed that his position as changed as Nintendo is not doing enough outside of its popular gaming consoles.

Another analyst, Junko Yamamura, from Nomura, wrote in a note on Thursday:

“We revise up our forecasts based on Apr-Jun results and current conditions. This is mainly because progress with the lengthening of the hardware and software lift cycles has exceeded our expectations”.

As COVID-19, the disease responsible for the boosted earnings remains of global concern, Nintendo’s performance may have better days ahead.

The Figures That Spiked Nintendo Stock

As Coinspeaker reported, Nintendo saw a 428% increase in profits with an operating profit of 144.7 billion yen ($1.4 billion) in the April-June quarter. This figure exceeded analyst’s expectations and represents a jump from the 27.4 billion yen it posted in Q1 2019.

The sales of gaming consoles reached an impressive figure in the quarter under review. Besides the Nintendo Switch and Switch Lite consoles, it sold 1.32 million units of Xenoblade Chronicles Definitive Edition. Animal Crossing: New Horizons stays at the top of the list with sales totaling 10.63 million units. Sales of the company’s popular Nintendo Switch and Switch Lite consoles grew around 167% to 5.68 million units in the quarter. Digital sales of software climbed about 230% for Nintendo and accounted for about 56% of total software sales.

Following these boosted numbers, total sales came in at 358.1 billion yen, up by 108% from the 172.1 billion yen reported in Q1 2019. An overseas sales of 273.0 billion yen accounted for 76.3% of the total. After these impressive milestones, the company aims to consolidate its mobile business by focusing on operations that encourage more consumers to continue to enjoy playing the applications that have been previously released.

Greater Days Imminent

Until a cure is found for the coronavirus disease, the pandemic it brewed may still be in place but with modifications. The probability that the demand for gaming services will soar in the coming months is still high. This offers a positive future for stakeholders in the gaming business and thus informs such analysts buy position as Junko.

A push to correct the fears of analysts and investors like Goyal will also aid Nintendo products and stock. Firms like Microsoft Corporation (NASDAQ: MSFT) and Google LLC (NASDAQ: GOOGL) have functional online gaming services including, and the complete revamp of game offerings as downloadable apps appear more sustainable in the near future.

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