Nintendo has found itself suffering from its biggest stock decline since July 2011 after being excluded from the annual Nikkei 225 Stock Average, Japan’s stock market index, reports Bloomberg.
Company shares fell 8.4 percent to 10,860 yen ($110) on the day. It was ineligible for listing in the annual Nikkei review because the company recently shifted its listing from Osaka to a much larger listing in Tokyo.
The drop in value comes after Nintendo had gained 31 percent so far this year with market analysts expecting to make the transfer to the Nikkei. However, the exclusion has cost the company’s value a heavy blow.
The Nintendo 3DS continues to perform outstandingly in the face of the rising popularity of smartphone gaming, so much of the blame has been pointed at the sales of its Wii U console. The company saw some success over the summer with promises of the return of its most classic and beloved franchises, like Mario and Donkey Kong. However, analysts do not believe this will be enough in the long run.
“The early signs of key first-party software inducing a major turnaround in Wii U console fundamentals are not promising, and the outlook for third-party support is grim,” said CLSA analyst Jay Defibaugh. “The value of iconic Nintendo franchises may be declining as younger generations discover gaming through mobile devices.”
However, the value of Nintendo is still enormous in Japan, clocking in at $15.4 billion. Had it been added, it would have been the fourth most valuable stock on the listing after Fast Retailing Co., Softbank Corp and Fanuc Corp.
“We believe Nintendo’s shares have been overvalued due to speculative demand, on the assumption that they would be included in the Nikkei,” says BNP Paribas SA analyst Takao Suzuki. “As this expectation has come to nothing, this appears to be the right time to sell.”