Nintendo Stock Drops After Low Earnings Report

By M. Kang

Posted on August 7, 2021

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According to a report by Bloomberg, Nintendo missed its quarterly profit estimates, resulting in as much as an 8.8% drop in stock prices.

Nintendo reported an “operating income of 119.75 billion yen ($1.1 billion) for the June quarter, compared with the average projection for 130.9 billion yen.” It also continued to estimate that profits would be down in the fiscal year.

While earnings reports do play a big role in stock prices, this particular missed earnings estimate may point to an industry-wide drop as countries begin returning to normal even as the pandemic continues. As people go back to work or step outside the house for social activities again, the need for gaming is not as apparent, particularly for households who were not into gaming but turned to it during the pandemic.

Additionally, Nintendo specifically benefited from the breakout of Animal Crossing: New Horizons. The sales numbers for the game, currently the second most sold Nintendo Switch game, cannot be easily matched.

Bloomberg notes that while the company is “now counting on the Oct. 8 launch of a new Switch model with a bigger, OLED screen to reinvigorate the four-year-old platform in time for the crucial holiday season… some investors have taken a negative view of the upcoming Switch and its higher $350 price tag.”