Nintendo shares have seen their biggest drop in 18 months, after the company’s quarterly earnings call revealed a decline in profit margins and saw executives fending off rumors of a Switch 2 price hike.
The Japanese gaming company’s stock fell as much as 11% in a single day following the earnings call, Bloomberg reports. While the Switch 2 continued to sell well, selling just over 7 million units this quarter to beat the average analyst estimate of 6.5 million, the new console’s lower profit margins saw the company’s profit ratio take a dip. Despite sales and income mostly trending upwards, Nintendo’s profit nevertheless failed to meet projections.
Nintendo president Shuntaro Furukawa acknowledged that the company was feeling pressure from a difficult market, with component costs increasing due to the AI boom, but said the company is well-positioned to handle it for now. “We are engaging in long-term discussions with our suppliers to ensure we maintain a stable intake of chips,” Furukawa said. “We do not expect major impact during the fourth quarter of this year. However, from the next fiscal year onward, if this price hike lasts longer than anticipated, it could potentially put pressure on our profitability.”
