Household stocks faced increased selling pressure for positive vaccine new
Last week Nintendo updated its Switch Video Game Console Policy
Nintendo’s share price closed 4.5% lower today after reaching its lowest level in almost three months
The shares of Nintendo Co. (T: 7954) fell 4.5% today as “stay-at-home” shares suffered a defeat amid known optimism that a government-approved vaccine will soon be available.
Fundamental analysis: Higher forecast published
Last week Nintendo announced that it intends to deliver 24 million of its Switch video game consoles by March 2021, an increase from the previous forecast of 19 million. Thanks to certain video games such as “Animal Crossing,” Nintendo also increased its operating profit forecast by 50% to 450 billion yen ($4.3 billion): New Horizons”, which has attracted new players to the Switch console.
However, the Japanese company warned of uncertainty, as the current gaming madness is mainly driven by the coronavirus pandemic.
The company’s operating profit increased by more than 50% between July and September compared to the same period last year, with the company reporting an operating profit of 291 million yen for the first six months.
The consumer electronics company had been skeptical about raising its forecasts despite strong sales of the Switch console, pointing out that the increase in sales could prove to be short-lived as players were forced to stay at home due to the pandemic.
Shuntaro Furukawa, President of Nintendo, said the company had had some production problems with the switch console, but solving these problems helped boost sales and allowed the company to reaffirm its forecasts.
The Japanese company sold 12.5 million switch consoles in the first half of fiscal 2020, including 8.4 million hybrid home-portable switch devices and 4.2 million Switch Lite consoles exclusively portable.
The estimates are “still conservative, but at least Nintendo has responded,” said Serkan Toto, founder of an independent consulting firm focused on the Japanese gaming industry, Kantan Games.
Blocking bans later this year and the recent resurgence of corona virus cases could indicate that the games boom could continue until the end of 2020.
Technical analysis: Stocks plummet on vaccine breakthrough
The shares of almost all companies focused on the gambling sector fell on Monday and Tuesday on reports that the Covid-19 vaccine may soon be available. Nintendo’s share price closed 4.5% lower after reaching its lowest level in almost three months.
Daily chart of the Nintendo share (TradingView)
Nevertheless, the buyers managed to achieve a daily closing above the 200 DMA at 53900. A daily close below this level would almost certainly push the stock towards the main short term support line at 51900 to give new buyers a chance to enter the long side.
Summary
Nintendo’s share price fell due to vaccine news, just one week after the Japanese consumer electronics company raised its forecast for Nintendo switch consoles.
