Nintendo Co., Ltd: Why Is NTDOY Stock Taking a Hit Today?

NTDOY stockWill Nintendo Co., Ltd (ADR)’s Big Idea Help NTDOY Stock?

Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) stock is down about six percent after a video trailer for its new game console, the “Nintendo Switch” (formerly called “Nintendo NX”), failed to impress. The company’s TYO:7974 stock in Tokyo also lost about seven percent today. The Nintendo Switch is the company’s attempt to combine a console with handheld gaming.

Nintendo Switch was designed as the machine that would introduce a totally new way of experiencing hardware and software together. Amir Anvarzadeh, of BGC Partners, Inc. (NASDAQ:BGCP), says that in an era of smart devices where a person can play games anywhere, the Nintendo Switch is not evolutionary enough as a concept. (Source: “Nintendo’s Dream of Gaming On-the-Go Gets a Reality Check,” Bloomberg, October 21, 2016.)

NTDOY stock had grabbed headlines early this year, riding the tremendous popularity of the Pokémon Go game. Although the success of the augmented reality (AR) game is not expected to boost the financials of the company much, it did great to strengthen the Nintendo brand.

The Nintendo Switch is a hybrid gaming console, consisting of a tablet-like device and a dock. Together they make a gaming console for TV. But when the device is removed, it becomes a portable gaming system. It allows gamers to play at home or on the go.

Nintendo has said that top gaming companies, like Activision Blizzard, Inc. (NASDAQ:ATVI), Electronic Arts Inc. (NASDAQ:EA), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO) are supporting the Nintendo Switch.

The success of Nintendo Switch is very important for Nintendo, as it will determine the company’s future course of action. The sales of its last console, the “Wii U,” which was launched in 2012, were way below expectations. If the Nintendo Switch fails to click, it would mean that it would be better off for Nintendo to make games for mobile platforms instead of losing money on consoles. This could prove to be a winning formula for the company, as well as for Nintendo stock.

Last month, Nintendo joined up with Apple Inc. (NASDAQ:AAPL) to introduce the Super Mario Run game for Apple’s “iPhone 7,” and expectations are high as it gets ready to be released later this year.

With the new Nintendo Switch, the company aims to target fans of competitive video gaming. The new hardware will go on sale in March 2017, but the price has not been disclosed yet. If Nintendo introduces it at lower price than rival consoles like the Sony Corp (ADR) (NYSE:SNE) PlayStation 4,” it might push up sales. If Nintendo can come up with some great content for the Nintendo Switch, NTDOY stock is likely to be buoyed.