TOKYO :Shares of Japan’s Nintendo Co Ltd and SoftBank Group Corp fell sharply on Wednesday, after both companies jolted investors with disappointing results, emphasising the dim outlook for global tech firms.
Shares of Nintendo dropped 7.6 per cent after the maker of the Switch video game console reported lower sales and profit and cut its full-year outlook. It also cut its sales target for the Switch console. Nintendo shares were on track for their biggest one-day loss since late 2021.
SoftBank shares fell 6.6 per cent after it reported a quarterly loss, hit by its massive Vision Fund investment unit, which fell into the red for the fourth straight quarter. The global tech investor also gave a cautious outlook.
The results from both companies illustrate how tech firms have been squeezed by a downturn in demand that has been fuelled by rising inflation and interest rates. Nintendo is struggling with softer sales for the ageing Switch, while SoftBank has seen valuations weaken for its sprawling tech portfolio.
“The Nintendo Switch is now a six-year-old console and demand is now exhausted,” analyst Mark Chadwick said on Smartkarma.
“Our thesis is that the hardware cycle has peaked and that the share price will head lower in tandem with the dwindling top line.”
The declines for Nintendo and SoftBank weighed on the broader market. The Nikkei 225 share index was down nearly 1 per cent in morning trade.