Nintendo shares have declined by more than 40% over the past year. The company reported a 41% year-over-year drop in Switch 2 sales and a 16% decrease in operating profit, which fell to ¥73.9 billion. These figures missed analyst expectations, contributing to the current pressure on the firm's US-listed shares.
Despite the slowdown, Nintendo maintains its annual sales target of 16.5 million units. The company sold 6.49 million consoles in the first half of the year, requiring 10 million more sales by March 2027. To boost performance, Nintendo released a remake of The Legend of Zelda: Ocarina of Time on November 5, which the company president, Shuntaro Furukawa, characterized as a strong start.
Profitability remains a key concern for investors due to rising memory-chip costs. In September, Nintendo increased the US price of the Switch 2 to $499.99. While management has no immediate plans for further price hikes, software sales grew by 18.8% in the first half, indicating continued engagement from the existing user base.
Analysts at Citi maintain a buy rating on the stock with a 24% upside target, suggesting that the new Zelda title could drive hardware purchases during the holiday season. The upcoming quarter will be a critical test for the company's ability to meet its annual goals and manage manufacturing margins amid ongoing market volatility.
