Shares of Japanese video game company Nintendo(OTC: NTDOY) fell on Tuesday after a Bloomberg report said that the company would delay the release of its new hardware device, the Switch 2. The report came out Friday evening after the market closed.
And since the market was closed over the weekend, as well as Monday, investors couldn't react until today. As of 1:50 p.m. ET, Nintendo stock was down 5%.
What's going on with the Switch 2?
First, investors should understand that the Switch 2 console hasn't even been announced yet by notoriously tight-lipped Nintendo.
Nintendo launched its latest console, the Nintendo Switch, seven years ago, and it's sold 139 million units as of December 2023. It's been an impressive run for the Nintendo Switch. But after this much time, investors and analysts alike were expecting a new console in 2024.
According to anonymous sources for Bloomberg, Nintendo is telling video game publishers not to expect a new console until after March 2025.
This is only a few months later than when analysts had expected a new console from Nintendo, which sounds like a minor detail to shrug off. But March falls after the important holiday shopping season, which is why the market is reacting so negatively to this news.
What should investors do now?
Even though it's not offering much commentary, I believe it's logical to assume that Nintendo is working on its next-generation video game console. But I wouldn't assume that the company is running into problems with its development. It's trying to make the Switch last as long as possible.
Nintendo's management says this in its press releases. It recently said that its "objective is to continually release new offerings so more consumers keep playing Nintendo Switch even longer, and we can maximize hardware sales."
Considering its sales are still strong and profits are high, Nintendo likely sees a little more life in its current Switch console and will release its successor when it believes the time is right. That could lead to slower growth in the coming year. But I don't believe it's a reason for long-term concern.
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Jon Quast has positions in Nintendo. The Motley Fool recommends Nintendo. The Motley Fool has a disclosure policy.
