Nintendo Shares Soar As a New Wave of COVID-19 Cases and Pokemon Loom on the Horizon

Every major player in the Video Gaming industry has seen a tremendous financial growth spurt (driven by sales) during the COVID-19 Pandemic. Lockdown has prompted people to stay indoors, and to flock to their video gaming consoles. The biggest winner has been by far Nintendo, with their Hybrid Portable Switch Console.

Microsoft saw a 130-percent increase in multiplayer engagement in the months of March and April. Nintendo saw a sales increase of its Switch console of 24 percent year-over-year, and Animal Crossing New Horizons rushed out of the games to sell an astonishing 13.5 million units.

Thus, this week’s news of Nintendo’s shares reaching highs over 50,000 Yen per share (a value not seen since August 2008) are not surprising, and analysts have come up with a few reasons to explain the sudden 3-day surge.

As long as COVID-19 is around, people will remain indoors for prolonged periods of time. Normal weekend activities such as movie going (to theaters), concerts, and other social activities have been reduced or all together eliminated in many countries. A surge in cases in different countries is expected (as countries begin to reopen) and such many investors are predicting a second lock-down which in part explains the rise of share value for Nintendo.

Demand for the Nintendo Hybrid is so high that many analysts predict Switch Sales to hit 75 million units by March 2021 (The Switch is approaching the 60 million mark as of this article). The other reason for the increase in stock value is that Nintendo announced a new round of Pokemon games.

Still, some analysts such as Amir Anvarzadeh, a Japan stock market strategist at Asymmetric Advisor caution that the expectancy of a second lockdown in consequence of an upcoming wave of COVID-19 cases is a bit far fetched,

“We have been telling our clients to sell into this because the 2nd wave will not lead to lockdown periods which provided the positive distortion to (Nintendo’s) sales in the first wave. This is a very important distinction which the market might be overlooking.”- Amir Anvarzadeh Source: CNBC

Apart from Animal Crossing New Horizons, the Switch recently saw in important summer releases in Xenoblade Chronicles: Definite Edition, which doubled the sales of the original game’s launch sales on Wii.

The Switch’s growth and software sales have prompted giant publisher EA (Electronic Arts) to announce 7 Switch titles, with Apex Legends and Burnout Paradise: Remastered confirmed. The remaining 5 titles remain a mystery. But the announcement is certainly a 180 degree turn from an initial EA stance on the system in 2019,

“A great many Switch owners also own a PlayStation 4 or an Xbox One or a PC, and very often choose to play the games that we make on those platforms even though they have a Switch and they enjoy a lot of great content on the Switch.”- EA CEO Andrew Wilson

A Pandemic, and a millions of Switch consoles sold since Wilson’s statement last year, and EA investors seem enthusiastic about pushing the company into supporting Nintendo’s hot selling machine. What a difference can a year a make.