Nintendo shares closed 8.4% lower in Tokyo at 7,020 yen, marking their lowest level since August 2024, after the company announced a price hike for its Switch 2 console and issued a weaker sales forecast for the current fiscal year. The stock has now fallen 34% year-to-date, reflecting investor concerns about the company's outlook and the impact of higher production costs due to a surge in memory chip prices driven by the AI infrastructure boom [1].
On Friday, Nintendo raised the price of the Switch 2 by $50 in the U.S. and by 10,000 yen ($64) in Japan, citing increased memory costs. The company now forecasts 16.5 million unit sales of the Switch 2 for the fiscal year ending March 2027, down from 19.86 million units since its launch in June last year. This predicted decline in sales for the less than one-year-old console has raised concerns among investors, as new consoles typically see rising sales in their early years [1].
Serkan Toto, CEO of Kantan Games, noted that Nintendo's forecast for declining hardware sales is unusual for a new console and attributed the expected softer demand primarily to the price hike. However, Toto also suggested that Nintendo is known for issuing conservative guidance and may be lowballing its estimates, expecting users to eventually adapt to the new price [1].
Kazunori Ito, director at Morningstar, echoed this sentiment, calling Nintendo's guidance "overly conservative" and stating that the price hike was inevitable due to prolonged inflation in memory costs. Ito expects Switch 2 sales to reach 19 million units in the current fiscal year, higher than Nintendo's forecast, and believes the market is underestimating the long-term earnings potential from the migration of over 100 million Switch users to the new platform. Nintendo also forecasted software sales across the original Switch and Switch 2 to total 165 million units for the fiscal year ending March 2027 [1].
CONCLUSION
Nintendo's share price suffered a sharp decline following its announcement of a Switch 2 price hike and a weaker sales outlook, driven by higher memory costs. While the company and some analysts expect near-term headwinds, others believe Nintendo's guidance is conservative and see long-term growth potential as users transition to the new platform.