Shares of Nintendo Co., Ltd. tumbled sharply on Monday. The gaming giant warned of a decline in sales for its flagship Switch 2 console this fiscal year and announced a price increase for the device, citing rising memory costs.
Nintendo's stock in Tokyo closed down 8.4% at ¥7,020, hitting its lowest level since August 2024. The stock has fallen 34% year-to-date.
Last Friday, Nintendo announced it was raising the price of the Switch 2 in multiple global markets. The surge in memory chip prices, driven by the artificial intelligence infrastructure boom, has increased the production cost of the console.
Nintendo forecasts Switch 2 sales of 16.5 million units for the fiscal year ending March 2027, below the 19.86 million units sold since its launch in June last year. The expectation of declining sales for the console, which has been on the market for less than a year, has raised investor concerns.
Serkan Toto, CEO of game industry consultancy Kantan Games, told U.S. media on Monday: "Nintendo is predicting a decline in Switch 2 hardware sales this fiscal year, when new consoles typically enter a growth cycle." "The core reason is undoubtedly the price increase. Nintendo itself believes the hike will weaken demand." Toto said, "I believe Nintendo has, as always, set the price conservatively, because users will get accustomed to the new price over time."
In a statement on Sunday, Kazunori Ito, a director at Morningstar, said Nintendo's guidance was "overly conservative." "Given the long-term inflation in memory costs, we believe the console price increase was inevitable. While the weak shipment guidance may reflect excessive caution about demand, the price hike itself remains moderate, and we expect shipments to outperform the company's forecast," Ito said.
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