Investors push for Switch 2 price increase, with Nintendo stock rattled by memory shortage

The May 8th fiscal year-end earnings report has Nintendo stockholders anxious. Even though the company’s handheld continues to set sales records, investors aren't impressed. The stock price has been on a gradual decline since the memory shortage intensified. Bloomberg (paywalled) reports that some critics are calling for a Switch 2 price increase to boost profits.  

Why has the Nintendo stock struggled?

Takashi Mochizuki and Alice French highlight the 5-month-plus downward trend of the Nintendo stock. Holders have become concerned that the gaming giant is selling its latest console at a loss. Storage and memory costs remain stubbornly high, with no sign of demand from AI data centers easing.

Given that the system relies on these critical parts, the company may eventually follow Sony and Microsoft's example. Most recently, the PS5 saw a dramatic jump in MSRP due to challenging economic conditions. Although a Switch 2 price increase would protect profits, opinions differ about this potential move.

Toyo Research analyst Hideki Yasuda says the manufacturer needs to reassure investors by responding to rising component costs. Yet, that could discourage buyers from upgrading to the handheld. Still at a critical point in its lifecycle, Michael Pachter of Wedbush Securities comments, “I think they would be foolish to raise prices.”

Options for Switch 2 pricing

Pachter notes that when consumers struggle, they often prioritize the essentials over entertainment. Regardless, Bloomberg proposes that a $50 increase in the U.S. may not prove disastrous. At the same time, the region-free Japanese model is one possible sacrifice. It's listed at a converted $320, making subsidizing the system difficult.

Before the last quarterly earnings report in February, Nintendo President Shuntaro Furukawa addressed the memory shortage. He explained that longstanding agreements with component suppliers provided some breathing room. Furukawa feared the impact of a Switch 2 price hike, but didn’t rule out taking action in the future.

Some supporters of Nintendo stock hope the executive will make an announcement fans have dreaded. One move that could counteract that disappointment is a reveal of an exciting first-party Switch 2 game. Although it likely won’t appear on May 8th, a rumored The Legend of Zelda: Ocarina of Time remake lurks to bolster holiday sales.