Nintendo Stock in Focus as Holiday Season Nears

Nintendo's shares have declined more than 40% over the past year. As Switch 2 sales slow and the holiday shopping season approaches, investors are monitoring whether a major Zelda release can revive the company's fortunes.

Nintendo's most recent earnings update did little to calm fears for its US-traded stock (NTDOY). Sales of the Switch 2 fell 41% compared with a year earlier.

Operating profit decreased 16% to ¥73.9 billion, falling short of analysts' projections.

The Holiday Season's Potential Impact on Nintendo's Outlook

Nintendo has maintained its full-year goal of selling 16.5 million Switch 2 units. But in the first half of the fiscal year, only 6.49 million consoles were sold, meaning roughly 10 million more need to be moved by March 2027.

The company's main holiday offering debuted on November 5: The Legend of Zelda: Ocarina of Time.

The well-received remake is already drawing interest, with a reported infinite-jump glitch that may appeal to speedrunners.

What matters more is that Nintendo President Shuntaro Furukawa called the game's release a “very strong start.” Analysts at Citi think Zelda could encourage holiday console buying.

“Given these growth drivers, we believe the shares will recover following a temporary correction,” the bank wrote.

Next Watchpoints for Nintendo Stock Investors

The primary worry centers on profitability.

In September, Nintendo increased the US price of the Switch 2 to $499.99. Margins are still being squeezed by climbing memory-chip costs, though executives say no further hike is planned in the near term.

Some positive indicators exist. Software sales for the Switch 2 increased 18.8% in the first half, indicating that current users continue to purchase games.

Three developments will determine if Nintendo's recovery can build momentum:

• Holiday demand: Whether Zelda can draw sufficient new Switch 2 buyers.
• Profit margins: Whether Nintendo can manage increasing production costs.
• Annual targets: Whether Nintendo can achieve the remaining 10 million console sales.

The fourth quarter, which includes Christmas, will serve as the initial major test. Solid holiday sales could back Citi's view of a recovery. A further weak quarter would subject Nintendo's aggressive full-year projection to more intense examination.