Yesterday morning the leading financial firm JP Morgan announced a downgrade of Nintendo’s rating from “Neutral” to “Underweight” while issuing a report for the Japanese gaming industry as a whole. The firm motivated the decision with the following:
Given the premise of a variety of scenarios, including the expansion of content to other platforms, the outlook for a turn around is difficult.
On the other hand Namco Bandai’s rating has been kept as “Overweight,” due to expected high performance while Square Enix and Konami were left on “Neutral”.
Immediately following the downgrade notice, Nintendo’s stock dropped 2% on the Tokyo Stock Exchange, while today it declined of another -2.75% following a radical reduction of income forecasts.
Personally, i find a bit strange how analysts continue to bring up the option of Nintendo expanding to other platforms. While Nintendo of America President Reggie Fils Aime said that the company is going to use smart devices as a marketing tool to promote its games with little experiences, that definitely doesn’t look like an indication of any intention to actually expand in that direction in any relevant way, and that possibility has been explicitly denied multiple times.
That said, while the Wii U may be struggling a bit, the 3DS continues to print money, so things may not be as grim as JP Morgan describes them.