Nintendo Shares Plunge 8.4% on Switch 2 Price Hike and Sales Warning

Nintendo shares plunged on Monday after the gaming giant warned sales of its flagship Switch 2 console would fall this fiscal year and after hiking the price of the device due to rising memory costs.

Shares of Nintendo closed 8.4% lower in Tokyo to 7,020 yen, the lowest since August 2024. The stock has fallen 34% this year.

On Friday, Nintendo announced price hikes for its Switch 2 console in markets across the world as an unprecedented surge in the price of memory chips, driven by the AI infrastructure boom, has increased the cost of producing the device. The price of the Switch 2 was raised by $50 in the U.S., and by 10,000 Japanese yen ($64) in Japan.

Nintendo said that it forecasts 16.5 million unit sales of the Switch 2 in the current fiscal year, which ends in March 2027, down from 19.86 million since its launch in June last year. The predicted fall in sales of the less than one-year-old console is raising concerns among investors.

Serkan Toto, CEO of Kantan Games, told CNBC on Monday that Nintendo is predicting Switch 2 hardware sales to go down this fiscal year instead of going up as it usually is the case with new consoles. The biggest factor is the price hike that Nintendo thinks will lead to softer demand. Toto said the latest numbers are likely no different from Nintendo's reputation for issuing conservative guidance, believing that users will get used to the new price of the console over time.

Kazunori Ito, director at Morningstar, said in a note on Sunday that Nintendo's guidance was overly conservative. Ito said the console price hike was inevitable given the prolonged inflation in memory costs. While the weak shipment guidance likely reflects undue caution on demand, the hike itself was kept modest, and Ito expects shipments to hold up better than the company anticipates at 19 million units in the current fiscal year compared to Nintendo's own forecast of 16.5 million units.

Ito said the market appears overly focused on near-term headwinds and conservative guidance, while underappreciating the long-term earnings growth from over 100 million Switch users migrating to the new platform and increasing game purchases. Ito views Nintendo's shares as undervalued.

Another metric the market watched closely was Nintendo's software or game sales. The Japanese gaming giant said it expects software sales across the original Switch and Switch 2 to total 165 million units in the fiscal year ending Mar. 2027. That would mark a roughly 11% year-on-year fall. Ito said the year-on-year decline in game shipment guidance risks signaling that Nintendo lacks confidence in its pipeline. However, as user engagement typically accelerates in the second year of a console cycle, Ito views this as too pessimistic. Investors are waiting for announcements from Nintendo on future hit games.