Quarterly net earnings jumped 43.9 per cent to $275 million, driven by the global popularity of its Switch console despite market concerns
Nintendo proves naysayers wrong as net profit almost doubles
Nintendo defied market doubts on Tuesday, reporting its quarterly net profit jumped 43.9 per cent to $275 million, driven by the global popularity of its Switch console and game titles.
The Kyoto-based game giant said its net profit for the three months to June reached ¥30.6 billion (Dh1bn), with operating profit soaring 88.4 per cent to ¥30.5 billion and sales up 9.1 per cent to ¥168.16bn, AFP reported.
For the year to March, it maintained its optimistic annual targets, expecting a net profit of ¥165bn and an operating profit of ¥225bn on sales of ¥1.2 trillion.
Ahead of the earnings report, shares in Nintendo slumped as a New York hedge fund increased its short bet against the company.
The firm dropped as much as 3.7 per cent earlier on Tuesday, the most in about a month, after Bloomberg News reported Gabriel Plotkin, head of Melvin Capital Management, had accumulated a short position of about $400 million in the Japanese game maker. Plotkin’s fund was short 1.2 million shares, or about 0.8 per cent of Nintendo’s outstanding stock, according to the latest filing with the Tokyo Stock Exchange. The firm has been increasing its position, with the latest trade on July 26.
Nintendo’s slump had left analysts and investors debating the reasons behind the decline. Some raised questions about whether long-term shareholders are losing faith in the outlook for the Switch game console. Shares fell as much as 27 per cent from their peak in May.
Mr Plotkin, a former star trader at SAC Capital Advisors, accounted for as much as 7 per cent of Nintendo’s daily volume in recent weeks. His position is the largest such trade against the company since at least 2013, according to Bloomberg data.
The downward pressure on Nintendo shares had sowed confusion among executives, investors and analysts. The Switch became one of the fastest-selling consoles in history after its release last year, quintupling the company’s annual operating profit. Many analysts were bewildered when shares began dropping sharply in May, leading to the biggest gap in a decade between brokerage targets and the actual stock price.