Japanese Nintendo played a play for the hearts of retail investors on Tuesday, announcing a 10-1 share split from October 1, a long-awaited move aimed at improving the liquidity of the video game maker’s shares.
The surprise announcement came when Nintendo said it expects to sell 21 million Switch game consoles during the fiscal year beginning April 1, a 9 percent year-over-year decline and the second annual fall, when the company struggles with component shortages.
The component shortage has continued into this year and it is not possible to say when they will end, Nintendo President Shuntaro Fukurawa said at a press conference.
Demand for the Switch in its sixth year on the market has been boosted by the launch in November of a model with an OLED display, which sold 5.8 million units until March, but the upgraded unit is still in short supply.
The Kyoto-based company’s share split comes as a number of technology companies, including Amazon and Google’s parent company Alphabet, have taken similar steps in recent months.
Such divisions are often seen as positive for the share price of companies because the lower cost makes them more accessible to some investors. Nintendo’s share has risen 5 percent so far this year and closed unchanged before its profit announcement.
Nintendo sold 23.06 million Switch consoles during the year ending March. That compares with a forecast of 23 million people made in February.
Nintendo, which relies on internal titles to drive game sales, expects to sell 210 million units of software this year, down from 235 million last year.
The company has a strong pipeline despite the delay in the sequel to Legend of Zelda: Breath of the Wild by spring 2023, with upcoming titles this year including Splatoon 3.
© Thomson Reuters 2022