Is Nintendo in crisis? Its shares record significant drops for these reasons

Recently, the value of Nintendo shares has dropped significantly. This is due to the recent crisis in Japan's stock market, which has significantly impacted the value of various Asian developers in what is being called the new Black Monday.

In reality, the Japanese company's shares have also suffered for other reasons. Reports indicate a slowdown in Switch sales, hardware that has become one of the company's most successful consoles. Additionally, there is uncertainty regarding the transition the company will soon make to its new console.

Nintendo struggles in the stock market due to poor Switch sales and the new Black Monday

This morning, the worst drop in Japan's stock market in many years was reported. Nikkei 225, the main stock index of this market, plummeted and lost 4451 points. As a result, it closed with a 12% drop, which had an immediate impact on various industries, including video games.

Due to this, we know that Nintendo's stock value dropped by 15%, reaching one of its lowest points in the last 6 months. The problems don't end there, as the company's most recent financial report also brought concerning news.

We know that Nintendo's net sales fell 46.5% year-over-year. Additionally, its net profits decreased by 55.3% compared to the same period. As if that weren't enough, its software sales dropped significantly by 41%.

This is because the Nintendo Switch is in the last part of its lifecycle. The system has been the company's most successful with 143.42 million units; however, its sales have slowed down, and the last quarter did not see a high-profile release.

Moreover, opinions on the company's transition to Switch 2 are divided. Some analysts believe the company will successfully navigate the process, while others have doubts about the company's moves, especially after what happened during the transition from Wii to Wii U.

Adding to this, the video game industry, in general, is going through a difficult time, full of uncertainty, studio closures, waves of layoffs, and other phenomena that destabilize the market. With this in mind, Nintendo is at a critical juncture for its future, as the presentation of Switch 2 is imminent, and its success will determine what happens to the company in the coming years.