Nintendo Stock: Revenue Jumps 86% as Switch 2 Becomes Fastest-Selling Console

TLDR

• Nintendo kept its Switch 2 sales forecast at 19 million units for fiscal year ending March 2026
• The company sold 17.37 million Switch 2 units through December, with 7 million in Q4 alone
• Revenue jumped 86% year-over-year while profit increased 24% in the fiscal third quarter
• Stock has dropped over 30% since August peak despite Switch 2 being fastest-selling console ever
• Rising memory chip prices not impacting current year earnings but could affect future profitability

Nintendo reported strong quarterly results on Tuesday, keeping its Switch 2 sales target intact despite investor concerns about momentum. The company maintained its November forecast of 19 million units for the fiscal year ending March 2026.

The gaming company has already sold 17.37 million Switch 2 units since launch. December quarter sales alone reached 7 million units. This makes the Switch 2 the fastest-selling console in Nintendo’s history.

Revenue climbed 86% year-over-year in the fiscal third quarter ended December 31. Net profit rose 24% during the same period. The company posted 806.32 billion yen ($5.2 billion) in revenue and 159.93 billion yen in net profit.

Nintendo Co., Ltd., NTDOY

Operating profit for the quarter jumped 23% to 155 billion yen. Nintendo forecast annual operating profit of 370 billion yen, representing a nearly one-third increase over the previous year.

Game Sales Drive Console Performance

“Mario Kart World” recorded sales of around 14 million units since the Switch 2 launch. “Donkey Kong Bananza” sold 4.25 million units. These titles have become the most popular games for the new console.

Nintendo plans to release “Mario Tennis Fever” in February and “Pokémon Pokopia” in March. Both games come from the company’s most successful franchises. “The Super Mario Galaxy Movie” is scheduled for April release.

The first Super Mario movie in 2023 drove significant sales of the original Switch console, which was six years old at the time. Nintendo hopes the new movie will provide a similar boost for the Switch 2.

Stock Pressure and Memory Chip Concerns

Nintendo’s share price hit a record high above 14,000 yen in August following the June Switch 2 launch. The stock has since fallen more than 30% from that peak.

Investors are watching the impact of surging memory chip prices on hardware costs. Memory chips are a key component in gaming consoles. President Shuntaro Furukawa said the price surge isn’t impacting this fiscal year’s results.

If memory prices continue rising over the long term, profitability could face pressure. However, analysts believe Nintendo is better positioned than competitors to handle the increases.

Jefferies analyst Atul Goyal noted that Nintendo’s “sizable inventories and long-term contracts will shield it” for several quarters. Goldman Sachs analyst Minami Munakata said concerns about Switch 2 profitability are overdone, pointing to Nintendo’s policy of not selling hardware at a loss.

The Switch 2 is priced at $449.99 in the United States. The Japanese version sells for 49,980 yen ($320). The higher U.S. price reflects the current inflationary environment.

Some investors have expressed concern about the games pipeline. The Switch benefited from high-profile titles like “The Legend of Zelda” series. “Despite a lack of exclusive blockbusters, Switch 2 sold like hotcakes over the holidays,” Toto said.

Nintendo sold 17.4 million units of the Switch 2 in the nine months through December, which included the critical year-end shopping season.

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