Nintendo Announced a 10-for-1 Stock Split Amid Ongoing Supply Chain Woes
Split Planned for October
Nintendo (NTDOY) plans a 10-for-1 stock split that will be effective October 1. The video gaming company is following in the footsteps of other companies that have made similar announcements recently, such as Apple (AAPL) and Amazon (AMZN).
While a split doesn’t change the value of the company or individual shares, valuations can get an eventual boost as the lower price makes shares comparatively more affordable for more investors. Nintendo also announced it will buy back about $432 million worth of shares.
Supply Chain Woes
Nintendo is one of many facing the downstream effects of supply chain disruptions. In its most recently-completed fiscal year, sales of its popular Switch video game unit declined by 20%. The company blamed “shortages of semiconductor components and other parts.”
Looking ahead, Nintendo predicts ongoing COVID-19 production disruptions and transportation issues will further limit its stock of products, especially given the difficulty securing key components such as semiconductors. The company estimates Switch sales’ revenue will drop another 9% in the coming year.
Strong Gaming Demand
On a more optimistic note, demand for video games is high, even as pandemic restrictions ease and more people head outdoors. Nintendo currently has about 100 million players per year who flock to its popular games such as Pokémon Legends, Arceus, and Mario Kart. It also has new offerings coming up such as Nintendo Switch Sports.
Meanwhile, both Microsoft (MSFT) and Sony (SONY) have made recent announcements of their plans to spend billions to acquire video game platforms. It seems the popularity of these games hasn’t escaped the watchful eyes of Big Tech.
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