Nintendo Stock Price Hits 3-Month Low on Disappointing Earnings

Shares of Nintendo, an electronics and video game company based out of Kyoto, Japan, dropped 3.5% today after it reported a disappointing profit for the October – December quarter. 

Fundamental analysis: Profit miss estimates

The Kyoto-based game maker reported operating profit of about 168.7 billion yen (approx. $1.55 billion), lower than $175 billion expected from market. The reported number is still 6% higher compared to a year ago. 

“We think we will see (Nintendo’s) share price continuing to correct over the next 18 months despite its decent earnings trend as growth hurdle rates have risen dramatically going into next year,” said Amir Anvarzadeh, a market strategist at Asymmetric Advisors.

Nintendo Switch, one of the company’s key products, registered 12.56 million sold consoles, while the lighter version – Switch Lite – sold 5.19 million units globally. Switch is a gaming console which allows users to play on-the-go, as well as to connect the device at home to a TV.

Nintendo’s CEO Shuntaro Furukawa confirmed that there are no current plans to release a new version of Switch this year. Previously, media outlets speculated that the upgraded version may be released this year.

Furthermore, the company said it expects to sell 19.5 million of Switch units for the year ending March. 

“We retain (Nintendo) firmly in our recommended shorts as we see its share price breaking below last year’s lows of Y28K within the next 12 months,” Anvarzadeh added in a note.

Technical analysis: New 3-month low in place

Nintendo stock price closed 3.5% lower on Friday following the Q3 earnings announcement. As seen on the chart below, the price tagged the 100-DMA (the blue line) and bounced higher. The last time that Nintendo stock price traded at these levels was the first day of November. 

Previously, the 13-year down-slipping trend line (the red line) capped advances made by Nintendo stock price since 2016. A year ago, the stock printed a 10-year high of Y49980. The 100-DMA will continue to support the bulls at Y40260 in addition to Y38770, a level that hosts the 100-WMA.

On the upside, the descending trend line is absolutely the key resistance for the bulls. A break of this line would open the door for more gains. However, the short-term risk for Nintendo stock price is to the downside.

Summary

Nintendo stock price plunged 3.5% following the lower-than-expected quarterly results. The stock price printed the 3-month low on the back of disappointing results with analysts expecting more losses for Nintendo stock price.