Nintendo hit by largest share price drop in two years

Game-maker Nintendo's share price dropped more than 10 per cent in trading overnight, after its Switch console's chipmaker took a tumble.

Shares in US chip designer Nvidia crashed nearly 17 per cent in after-hours trading last night, after it disappointed Wall Street by missing sales estimates in its third quarter and forecasting lower sales for the holiday period.

As of market close in Tokyo this morning, shares in Nintendo had correspondingly fallen to a daily low of ¥ 31,350, representing its largest one-day drop since 2016 and its lowest price this year. 

It was also the most traded stock by turnover in Japan, closing down 9.1 per cent at ¥ 31,860, its lowest closing mark since May last year.

Traders told Reuters that Nvidia's results in the US had raised concerns about Nintendo's potentially weak Switch sales, which were already under some scrutiny ahead of the Christmas peak.

Nintendo said at the end of last month that it sold 3.2m Switch consoles last quarter, indicating it had reached sales of just over 5m units for the financial year to date. As a result, Nintendo's optimistic target of 20m Switch sales by the end of March next year have left investors nervous about how the 18-month old console might fare in festive trading.

In 2017's holiday quarter, and the Nintendo Switch's first time in Christmas sales, Nintendo shifted around 7.2m units.

At the same time, stockbroker Daiwa Securities cut its target price for Nintendo stock following an interview with the company. Though it maintained a "buy" rating, Daiwa also lowered its forecast for operating profit by more than two per cent to ¥ 369bn.