Gaming giant Nintendo is reporting a drop in Switch sales and is also announcing a 10:1 stock split, which means ten new shares are created from an existing stock. The purpose is to make the stake more attractive to private investors.
Shareholders have been calling for a stock split for some time to increase liquidity in the gaming giant’s shares. The split takes effect on October 1 of this year, when each common share is split into 10 shares. Meanwhile, Nintendo reported a weak profit trend that reflects a slowdown in sales of its latest Switch game console.
share split surprise
Nintendo expects Switch sales to fall 9 percent in the future. Nintendo, which is headquartered in Kyoto, announced plans to buy back 56.36 billion yen ($432.9 million). The deal will take place on Wednesday, according to CNBC.
Nintendo’s surprise announcement about the stock split came when they reported earnings for the fiscal year ending March 31. Revenue was 1.69 trillion yen, down 3.6% from the previous year. Net profit fell 0.6 percent to 477.6 billion yen.
Switch sales discount
Part of that weakness is due to lower Switch sales, despite the company launching a new OLED model during the fiscal year. Console sales were 23.06 million units last fiscal year, down from 28.83 million over the past 12 months.
According to Nintendo, Switch sales have been affected by a shortage of semiconductor components and other parts. The Japanese gaming giant expects to sell 21 million Switch units during the current fiscal year ending March 2023. This is a 9 percent decrease compared to the previous year.
Increase game sales
Nintendo has warned that if Covid-19 restrictions disrupt production or transportation, it could affect the product lineup. The company also said product production may continue to be affected by difficulties sourcing components such as semiconductors.
Despite the decline in Switch sales, console gamers continued to buy Nintendo games. Software sales increased 1.8% over the past fiscal year, driven by demand for popular games, including “Pokemon Legends: Arceus” and “Mario Kart 8 Deluxe.”
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