Nintendo reported first-quarter earnings that beat analyst estimates. The company also cited poor sales of the Switch 2. The Switch 2 has not been released. The Switch 2 does not exist as a product you can purchase. Nintendo blamed a nonexistent product for underperformance in a quarter where they overperformed.
Analysts nodded. Wrote it down. Published price targets based on the impact of a console that lives entirely in press releases and the fever dreams of Reddit.
This is what passes for financial analysis now. A company beats estimates while simultaneously mourning the sales slump of vapor. The earnings call probably had a whole segment about supply chain challenges for the Switch 2. Shipping delays. Component shortages. All affecting a thing that does not occupy physical space in our dimension.
Some retail trader in Ohio just read the headline and sold his entire position because he saw the words "sales slump" and panicked. He will buy back in next week at a higher price after watching a TikTok about Nintendo's strong fundamentals. He will tell his wife they are building wealth.
The beautiful part is nobody questioned it. Not one analyst on the call asked how you measure a sales slump for a product that hasn't launched. That would be rude. That would imply someone made an error. Better to just model it into the discounted cash flow and move on.
Nintendo stock moved on the news. Which direction does not matter. It moved because numbers were reported and numbers must cause movement. The market demands human sacrifice and sometimes that sacrifice is logic.
Somewhere a technical analyst is drawing a head and shoulders pattern on a chart and explaining that the Switch 2's imaginary sales slump confirms the bearish divergence he spotted in the MACD. He charges $300 a month for this service. He has subscribers.
Photo by Kamil Switalski on Unsplash
Leave a Comment