Nintendo shares’ big 2-day tumble leaves investors worried

TOKYO: Nintendo Co suffered its biggest two-day drop in 18 months, befuddling analysts and sending investors scrambling to explain the sell-off.

Shares tumbled 6.3 per cent yesterday after losing four per cent on Friday, the largest twoday decline since December 2016. The drop left the stock at its lowest level since September and at its biggest discount versus Wall Street targets in nearly a decade.

Analysts reported getting dozens of inquiries yesterday from hedge funds and investors eager to understand the sell-off.

Theories ranged from falling expectations for positive surprises at next week’s Electronic Entertainment Expo conference, known as E3, to troubles with Nintendo’s online games.

“What is shocking is that recently there has been a lot of good news related to Nintendo,” wrote Jefferies Group analyst Atul Goyal, blaming the drop on traders who rely on technical chart analysis to make decisions.

Volatility in Nintendo shares has jumped since April as investors try to gauge whether the company can maintain the sales momentum of its popular Switch game console into a second year.

Last week’s unveiling of new Pokemon games sent shares surging 6.1 per cent over Wednesday and Thursday, only to drop sharply over the following two days. Volume was heavy yesterday, with Nintendo’s alone accounting for seven per cent of Tokyo’s US$22 billion (RM87.43 billion) in stock turnover.

“The market is probably selling shares ahead of E3 because people are concerned Nintendo doesn’t have a pipeline that will wow investors to a point where analysts will have to raise earnings targets again,” said Amir Anvarzadeh, a senior strategist at Asymmetric Advisors in Singapore.