Japanese gaming titan Nintendo (OTCMKTS:NTDOY) surprised investors today after announcing a 10-for-1 stock split coming Oct. 1. NTDOY stock closed up slightly on the news following the company’s fiscal 2022 earnings call.
The Kyoto-based company reported its financial results for its fiscal year that ended March 31. Nintendo reported selling 23 million Switch consoles, 20% less than last year.
While this is a substantial drop, the decline in sales wasn’t without justification. The company behind the likes of Mario and Donkey Kong cited an ongoing chip shortage as the primary culprit. This is largely true across the board for console makers, and was clearly accounted for when the company reduced its 2022 sales guidance from 24 million to 23 million consoles in February.
The company also offered its outlook for its fiscal 2023. Nintendo expects to sell 21 million switch units, a 9% drop from 2022, once again citing manufacturing hiccups.
“The consolidated earnings forecast is made under the assumption that we are able to manufacture the products in accordance with our sales plan. However, manufacturing and logistics may be impacted by factors such as obstacles in the procurement of parts including semiconductors, and risks associated with COVID-19.”
Despite the slowing console sales, Nintendo has plenty of going for it.
NTDOY Stock Climbs on Stock Split News
Nintendo’s planned stock split was arguably the star of its earnings report. The 10-for-1 split should help improve the liquidity of the gaming star’s shares.
This split could also appeal to new buyers a time when, Nintendo is outpacing its console competitors. For comparison, Microsoft (NASDAQ:MSFT) sold roughly 12 million Xbox Series X and S consoles in 2021. Sony (NYSE:SONY) managed to sell 17 million PlayStation 5 consoles during the same period. While each of the industry titans have suffered from the chip shortage, the Switch has already outsold its rivals in the first quarter of this year.
While it’s currently on something of a downtrend, Nintendo is, well, Nintendo. Analysts, investors and gamers alike are currently eagerly awaiting the next iteration of its gaming systems.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.