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Nintendo announces 10-1 stock split; sees Switch sales falling 9%
Global Banking & Finance Review®
Company
By Sam Nussey
TOKYO (Reuters) – Japan’s Nintendo Co Ltd on Tuesday made a play for the hearts of retail investors, announcing a 10-1 stock split effective Oct. 1, a long-called-for move that aims to improve the liquidity of the videogame maker’s shares.
The surprise announcement came as Nintendo said it expects sell 21 million Switch games consoles in the financial year that started on April 1, down 9% year on year and the second annual fall, as the company grapples with component shortages.
Component shortages have continued into this year and it is not possible to say when they will end, Nintendo President Shuntaro Fukurawa told a news conference.
Demand for the Switch in its sixth year on the market has been boosted by the November launch of a model with an OLED screen, which sold 5.8 million units through March, but the upgraded device remains in short supply.
The Kyoto-based company’s stock split comes as a string of tech firms, including Amazon.com Inc and Google parent Alphabet Inc, have made similar moves in recent months.
Such splits are often seen as positive for the share price of companies as the lower cost makes them more accessible to some investors.
Nintendo’s shares are up 5% year to date and closed flat at 56,360 yen ahead of its earnings announcement.
The gaming firm sold 23.06 million Switch consoles in the year ended March. That compared with a forecast of 23 million it made in February.
Nintendo, which depends on in-house titles to drive games sales, expects to sell 210 million units of software this year, down from 235 million last year.
The company has a strong pipeline despite the delay of the sequel to “Legend of Zelda: Breath of the Wild” to spring 2023, with upcoming titles this year including “Splatoon 3”.
(Reporting by Sam Nussey; Editing by Christopher Cushing, Jason Neely and Andrew Heavens)
A stock split is a corporate action where a company divides its existing shares into multiple shares to boost liquidity. It typically reduces the share price while maintaining the overall market capitalization.
Component shortages occur when there is a lack of necessary parts or materials required for production. This can lead to delays in manufacturing and reduced sales for companies.
Liquidity refers to how easily assets can be converted into cash without affecting their market price. Higher liquidity means assets can be sold quickly at stable prices.
A console is a device designed to play video games. Examples include the Nintendo Switch, PlayStation, and Xbox, which provide a platform for gaming experiences.
A financial year is a period used for calculating annual financial statements in businesses and organizations. It can differ from the calendar year and is often used for budgeting and reporting.
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