Switch 2: can the stock market predict the future of Nintendo consoles?

Did Nintendo do the right thing by offering an announcement of the Switch 2 in the form of a teaser, without revealing what makes its proposal interesting – namely, the games and the experiences? The Tokyo Stock Exchange has decided: what the video game giant is offering is not sufficient, despite new Joy-Cons. The day after the announcement, Nintendo's share price fell by 7%. The market seems to sanction a console that is too conventional and the lack of evolution compared to the first Switch of the name. Which, let's remember, is a goose that lays the golden eggs, with 146 million units sold and numerous records broken.

But is the Tokyo stock market reliable when it comes to predicting Nintendo's successes and failures? To do this, we went back in time and looked for variations in Nintendo's stock price, after the announcements of the last 3 consoles.

The stock market's reaction to the Switch announcement

For the first Switch of the name, released in 2017, the opposite happened. Nintendo stock rose during the announcement. For example, the title gained 3.34% on the Tokyo Stock Exchange following the console teaser published by Nintendo. The rest of the story will have proved investors right, for reasons we know.

The stock market's reaction to the Wii U announcement

The announcement of the Wii U in June 2011, during E3, had a very negative impact on Nintendo stock. It fell 5% that day and continued to fall, losing almost 10% in two days. Nintendo's stock price fell to its lowest level since January 2006. Suffice to say that the markets were cautious about Nintendo's touchscreen tablet console.

And the stock market was right : the Wii U only sold 13 million copies, making the console a formidable failure for Nintendo.

The stock market's reaction to the Wii announcement

Regarding the Wii, the analysis can be done in 3 steps. It's important to remember that the console's announcement journey was chaotic: it was supposed to be announced in 2005 and was postponed to 2006 because the concept of the signature controller didn't work as well as Nintendo wanted. In May 2006, at E3, Nintendo finally unveiled its Wii and its stock price increased slightly. But in September 2006, when Nintendo revealed the price and availability of the console, the price fell by 4%. Shareholders felt that Nintendo's strategy was not the right one.

But this short decline is an illusion: 2006 on a macroscopic level is in reality the year of Nintendo's first explosion. With 101 million units sold, the console was a huge success. Once again, the stock market was right… but not immediately after the announcement of the marketing strategy.