Nintendo Shares Drop Over 10% After 806bn Yen Revenue Miss and Memory Shortage
Nintendo shares plunged over 10% after quarterly revenue of 806.32 billion yen fell short of the expected 847.73 billion, despite an 86% year-on-year rise and a 24% profit increase. Investors warn that an unprecedented memory chip shortage and soaring component prices could compress margins if costs remain elevated.
1. Strong Quarterly Results Offset by Revenue Miss
In its fiscal third quarter ended December 31, Nintendo reported revenue of 806.3 billion yen, falling short of the 847.7 billion yen consensus estimate despite an 86 percent year-on-year increase. Net profit rose 24 percent to 159.9 billion yen, comfortably above the 147.3 billion yen forecast, driven by continued strong sales of both the original Switch and Switch 2 consoles. Year-to-date net profit has surged more than 50 percent compared with the prior nine months, reflecting the sustained popularity of first-party titles and the hybrid console format.
2. Memory Chip Shortage Raises Margin Concerns
Nintendo is navigating an unprecedented global shortage of memory chips, a key component in its consoles, which has led to steep price increases. While President Shuntaro Furukawa stated that elevated memory costs have not materially affected results for the current fiscal year, industry strategists warn that prolonged component scarcity could erode margins. Andrew Jackson, head of Japanese equity strategy at Ortus Advisors, cautioned that if memory prices remain at present levels, the company’s profitability could come under significant pressure.
3. Full-Year Sales Guidance Maintained on Console Demand
Despite the quarterly revenue shortfall, Nintendo reaffirmed its full-year forecast to sell 19 million units of Switch 2 by March 2026, up from an initial 15 million target. The company also upheld its operating profit projection of 370 billion yen, signaling confidence that hardware momentum and software attach rates will hold through the end of the fiscal year. Investors will watch closely whether strong holiday-season uptake can persist into the second half amid tougher year-on-year comparisons.
4. Content Pipeline and Media Releases to Drive Upgrades
Nintendo’s upcoming slate includes two blockbuster franchises: "Mario Tennis Fever" launching in February and "Pokémon Pokopia" arriving in March for the Switch 2, with the release of "The Super Mario Galaxy Movie" scheduled for April. The first Super Mario film in 2023 generated a notable boost in console sales, and analysts view the new movie as a potential catalyst for device upgrades. James McWhirter of Omdia describes 2026 as a "make-or-break year" for Switch 2’s mass-market penetration, hinging on both game releases and multimedia tie-ins to sustain consumer interest.