Nintendo – As Stock Slumps Over 8% it Misses Out on Nikkei 225

Today’s announcement on new inclusions to the Nikkei 225 did not include Nintendo and its stock was reported to slump over 8%.

Some analysts had projected earlier in the year that Nintendo would be considered too big to be added, as its market value is reportedly $15.4 billion.

In addition, today’s news has prompted some analysts to change their Nintendo stock recommendations from Buy to Sell, with the close of trade in Tokyo bringing a share value loss of 8.4% to 10,860 Yen; that’s the biggest drop since July 2011.

Here is what some analysts had to say:

Jay Defibaugh — analyst at CLSA in Tokyo

The early signs of key first-party software inducing a major turnaround in Wii U console fundamentals are not promising, and the outlook for third-party support is grim. The value of iconic Nintendo franchises may be declining as younger generations discover gaming through mobile devices.

Takao Suzuki — analyst at BNP Paribas SA in Tokyo

We believe Nintendo’s shares have been overvalued due to speculative demand, on the assumption that they would be included in the Nikkei. As this expectation has come to nothing, this appears to be the right time to sell.

But there is always hope for Nintendo – we’ll have to wait to see how its games and hardware will do in the coming months.

What are your thoughts?