Nintendo (NTDOY, Financial) shares have reached new highs as anticipation builds for the upcoming Switch 2 console. The company is set to unveil more details about the new console, which could be a pivotal moment for its stock. Nintendo's stock has surged approximately 25% over the past year, surpassing the performance of the Tokyo Stock Exchange Index and pushing its market capitalization beyond $100 billion for the first time.
However, short interest in the stock has increased, suggesting some investors are betting on a price correction. Analysts warn that unless the Switch 2 details exceed market expectations, the recent gains may have already priced in the good news. The upcoming launch event will reveal more about third-party game compatibility and pricing strategy, with concerns that tariffs could drive up the price.
Analysts like Doug Creutz from TD Cowen remain optimistic, maintaining a "buy" rating and predicting a 20% upside in the coming year. Creutz emphasizes the importance of an attractive software lineup, including new Mario Kart and Pokémon games, to sustain demand post-launch.
Despite high valuations and increased short-selling, many analysts are still bullish, believing that Switch 2 could revitalize sales growth. However, the stock's significant rise makes it vulnerable to any disappointment at the product launch.
