Published , by Asif Khan
Published , by Asif Khan
Nintendo Switch Lite was announced earlier this week. It is a $199 standalone handheld device that removes some of the very unique features of its predecessor. Nintendo Switch has been out on the market for over two years, and it appears that the Big N is employing some tactics from the Nintendo DS playbook. With the lower average selling price, increased portability, and new shiny colors, it seems that Nintendo may have been too conservative when they providing Switch unit sales guidance of 18 million units for the fiscal year of 2020.
With the Nintendo Switch Lite creating a new entry level for the Switch family of products, it is pretty obvious that the previous sales guidance is too low. It seems pretty obvious that Nintendo knew the product was in the works, so their internal sales projection is likely sandbagged. Nintendo President Furukawa made this point abundantly clear when he poured cold water all over the rumors of an E3 2019 reveal of a new Switch model. “As a general rule, we’re always working on new hardware and we will announce it when we are able to sell it,” said Furukawa, speaking to Bloomberg. Several analysts rolled their eyes at Nintendo in April when they guided for pretty tepid unit sales growth in both hardware and software for the 2020 fiscal year. Atul Goyal from Jeffries expressed this sentiment in an interview with Bloomberg. Please take a look.
Anaylst expectations for Nintendo Switch unit sales this year range form 15.5 million all the way up to 22 million units. The biggest concern Nintendo investors should have is about the supply of Nintendo Switch Lite come holiday time. Nintendo is launching the system with a September release date, so hopefully that gives them enough time to ramp up production for Christmas.
With the upcoming release of Pokemon Sword and Shield alongside a Special Pokemon Edition Nintendo Switch Lite, things are set up for the Big N to smash the weak full year guidance they provided back in April 2019 before the Switch Lite was revealed. Nintendo (NTDOY) shareholders are smiling this week as the stock hit a 52-week high on the news of the new version of the wildly popular console. The company will report earnings results on July 30, so be on the lookout for what management has to say about the impact of Nintendo Switch Lite on 2020 and beyond.
Full Disclosure:
At the time of this article, Asif A. Khan, his family members, and his company Virtue LLC had the following positions:
Long Nintendo via NTDOY shares