Short sellers set sights on Nintendo amid share slump
WALL Street short sellers were targeting Japanese gaming company Nintendo ahead of its results as the firm attempts to build on the success of its new handheld console.
The Nintendo Switch, a hybrid of a handheld device and a Tv-connected console, has put in a “record-breaking performance” in the UK and is the fastest selling home console of all time in the US. In its first year, it sold 15m units.
However, New York hedge fund Melvin Capital Management has accumulated a $400m (£304m) short bet against Nintendo, according to Bloomberg. Short-selling involves a deal which anticipates the share price will fall.
The move has the potential to rattle investors and is the largest such trade against the company since at least 2013, according to Bloomberg data.
Tokyo-listed Nintendo’s shares have lost around 24pc of their value despite the critical acclaim and popular demand for the device. While it has enjoyed 12 months of unprecedented success with the Switch, Nintendo’s share price has been falling off from a high point in March. Nintendo executives and investors have been dismayed at the drop.
Earlier this month, executives said it would aim to sell 20m consoles in the year to March 2019, while last quarter it said profits were up 73pc.
Shortly after the company’s presentation at gaming convention E3 in June, Reggie Fils-aimé, Nintendo America president, said in an interview: “We know from a company perspective there’s a lot more up our sleeve and a lot more we have to show in the weeks and months ahead.”
Last week, Jefferies analyst Atul Goyal cut his ambitious target price for Nintendo, predicting Switch sales would slow.
Serkan Toto, head of Japanese consultant Kantan Games, told The Daily Telegraph: “All eyes are on the 20m Switch sales forecast and if Nintendo will uphold it. I don’t see any dramatic changes in the last four weeks.
“What many people don’t understand is Nintendo traditionally generates around 50pc of its yearly sales in the holiday quarter, including Black Friday and Christmas. It’s way too early to ring the death bell for Nintendo.”