Nintendo's new Switch 2 console announcement disappoints investors, stock falls in after-hours trading

From Nasdaq: 2025-01-21 00:35:11

Nintendo ADR (OTCMKTS: NTDOY) hit a 52-week high at $16 after announcing the upcoming Switch 2 console. Stock fell 5% in after-hours trading due to lack of specifics. The new console is highly anticipated by gamers and investors, with potential game compatibility limitations sparking some disappointment.

Nintendo’s revenue declined from 1.76 trillion JPY in 2021 to 1.67 trillion JPY in 2024. The upcoming Switch 2 is expected to be more powerful than its predecessor, with an expanded screen size and new features. Investors hope the new console will revive Nintendo’s sales growth, which has been declining in recent years.

NTDOY ADR returns were volatile in the past four years, ranging from -82% in 2022 to 25% in 2023. The Trefis High-Quality Portfolio, with 30 stocks, outperformed the S&P 500 over the same period. The Switch 2 launch could provide a boost for Nintendo, but the stock is currently trading at a higher P/S ratio than its historical average.

Amid uncertain macroeconomic conditions, investors are eager to see if NTDOY will outperform the S&P 500 in the next 12 months. The Switch 2 launch is expected to bring positive momentum for Nintendo, but potential investors may want to wait for more details in the April announcement. Nintendo stock is currently trading at 6.5x trailing revenues, higher than its historical average of 4.1x over the last three years.



Read more at Nasdaq: What’s Next For Nintendo After The Underwhelming Response To Switch 2 Announcement?