According to the news report by Bloomberg, Nintendo Co.’s shares slid even further after analysts criticized the company’s game lineup at the Electronic Entertainment Expo (E3) held earlier this week as lacking, getting investors worried about the future of the company.
The Japanese gaming giant’s shares dropped another 4% in trading on Thursday. This drop in shares has gone up to 16% for the month of June, which puts the company’s stock in line for its worst monthly performance since September of 2015.
Despite the fact that Nintendo’s Switch has done really well, exceeding sales targets as well as pushing up the company’s bottom line, analysts and investors alike are worried that the company may have put up all it had to offer, leaving little to look forward to for the rest of the year.
The head of Nintendo’s operations in the US, Reggie Fils-Aime is fighting back against these concerns. He stated that the analysts and investors had gotten their sentiment wrong and that the company was going to show more in the coming weeks and months. He said that the Switch hybrid console was doing very well ahead of its second holiday season.
In an interview, Fils-Aime answered some key questions that were top of mind for the market. With regard to the gaming pipeline, he stated that Nintendo has historically played its cards close to its chest. He said that when the company surprised, it surprised big, ensuring the gaming community and the environment had something to talk about.
This belief that Nintendo has the ability to surprise is definitely reflected in the market response. Analysts may be commenting on the company’s gaming lineup, but haven’t lowered their performance targets for the company.
Of the 23 analysts that cover the Japanese gaming company, 20 still have kept their “Buy” rating, while 3 have given a “Hold” rating. None have given a “Sell” rating. This is a step up from the beginning of the year, when 19 out of 26 analysts rated the company “Buy”, 5 rated it “Hold” and 2 rated it “Sell”.
Fils-Aime went on to say that while he cannot comment on what the analysts are saying, he knows from a company perspective that there is a lot more lined up for the future. He said that at an event such as the E3, Nintendo typically only reveals lineups for the next 6 to 9 months and no more than that.
He said that investors had nothing to worry about the company’s lineup drying up. The head of US operations stated that if one were to see the performance of the company of the years, versus what analysts have been saying, not many analysts have been able to get their predictions right.
Additionally, the company’s latest game Fortnite is currently the most popular game in the world, getting more than 2 million downloads of the free-to-play version within the first 24 hours of its release. That game, in combination with the new Switch hardware, is, according to him, a magical combination and is raking in revenue for the company.
In relation to the question of whether Nintendo was moving towards more digital revenue, Fils-Aime that the company’s strategy was to use digital revenue generation as only one avenue to drive engagement in the game.
Another concern that investors had raised was that Switch lacked third-party games. To this, Fils-Aime responded saying it was a baseless concern. He said that third party games were shown at the E3 on the Switch, and more were expected to be launched on the platform. He said that third party support was especially strong at this point since their gaming platform was growing exponentially.