Nintendo's Next-Gen Switch Delay Rocks the Market: A 2025 Launch Setback

📝 SUMMARY: In a surprising turn of events, Nintendo Co. ($7974) announced a delay in the launch of its eagerly awaited next-generation gaming console, leading to a sharp decline in its stock value. Initially set for release in the last quarter of 2024, the Kyoto-based company has now informed its game publishing partners to anticipate the debut of the Switch successor in the early months of 2025, with a potential delay until March at the earliest. This news prompted a significant market reaction, with Nintendo's shares experiencing their most considerable intraday drop since October 2021, ultimately settling at a 5.8% decrease for the day.

The delay comes at a critical juncture for Nintendo, which had seen its shares soar to an all-time high on investor optimism for the replacement of the seven-year-old Switch console within 2024. Market analysts suggest that this postponement could unsettle new investors who are keen on seeing immediate growth and tangible outcomes from Nintendo, especially as the company's fiscal projections for March 2025 might now appear less promising if the launch of key software titles is also delayed alongside the hardware.

Nintendo's strategy of reserving its blockbuster game titles for the next-generation hardware exacerbates the situation, with significant franchises such as Legend of Zelda, Mario, and Splatoon unlikely to see new releases before the console upgrade. This approach underscores the hardware delay's compounded impact on both the company's software sales and overall market performance.

While Nintendo President Shuntaro Furukawa has remained reticent about the new hardware details, citing the company's focus on the current fiscal year, the absence of a new Switch console for the upcoming holiday season positions Nintendo in a challenging spot against competitors like Sony Group Corp. ($6758) and Microsoft Corp. ($MSFT). Despite these setbacks, some analysts, like Bernstein's Robin Zhu, view the stock's decline as a potential buying opportunity, anticipating a hardware announcement within the next six months.

🔍 SOURCE: https://www.bloomberg.com/news/articles/2024-02-19/nintendo-plunges-after-game-makers-say-switch-2-pushed-to-2025