Big N’s investors want the Nintendo Switch 2 to become more expensive, and that is one reason the company’s stock is where it is now.
Bloomberg Tech In Depth’s newsletter raised a sensitive question: should Nintendo raise the price of the Switch 2 given the current economic situation and the persistent memory shortage? Sony has done so across the entire PlayStation ecosystem, including PlayStation 5, PlayStation 5 “slim,” PlayStation 5 Pro, and PlayStation Portal. Nintendo, however, has so far stuck to its current prices, but Bloomberg points out that investors are not exactly satisfied with this strategy. The company’s share price has been falling steadily for five months, marking Nintendo’s longest sustained stock decline since 2016.
All of this is happening despite the Nintendo Switch 2 continuing to sell extremely well, not to mention the success of games such as Pokémon Pokopia, which sold 2.2 million copies in its first four days, or films such as The Super Mario Galaxy Movie, which leads this year’s global box office with nearly $900 million in revenue. So what is the problem? According to Bloomberg, investors are deeply concerned that the Nintendo Switch 2 is not profitable enough at its current $450 price. During the company’s latest quarterly earnings report, Nintendo president Shuntaro Furukawa will likely address the pricing issue.
Bloomberg asked several leading analysts about the company’s strategy, and opinions are divided. Hideki Yasuda, an analyst at Toyo Research Advice, believes Nintendo’s stock price will continue to fall until the console’s price rises, because the market punishes shares that do not provide protection against inflation. Michael Pachter, an analyst at Wedbush Securities, believes it would be foolish to raise the price now. In his view, consumers are in a difficult situation, paying more for gasoline and food, and when prices rise, entertainment budgets are among the first to be cut. According to Pelham Smithers Associates, an independent research firm monitoring the Japanese stock market, Nintendo simply cannot afford to make a pricing mistake in either direction. If it gets pricing wrong, whichever way it moves, it could run into the same problem it had with Wii U, and the situation would only get worse.
Given Nintendo’s traditional caution, a wait-and-see strategy cannot be ruled out, with the decision possibly postponed to a later date. It should soon become clear whether that is the path the company chooses, or whether investor pressure will eventually force it to change the price of the Switch 2.
