Nintendo carried out a 10-for-1 stock split which reduces the price of an individual share. The 133 year old Japanese gaming giant hopes the move will make it more affordable for a wider pool of investors to buy the company’s shares.
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Nintendo carried out its previously announced 10-for-1 stock split on Thursday aimed at reducing the price of one individual share to attract new investors to the more than century old Japanese gaming giant.
Prices for Nintendo’s stock reflected the split on the Japanese Stock Exchange website. Nintendo shares closed at 6,043 Japanese yen ($41.76) on Thursday, after closing at 59,700 on Wednesday.
Nintendo shares were about 2% lower on Friday morning Asia.
Each share of common Nintendo stock has been split into 10 shares, hence the reduction in price per share.
The move is designed to appeal to a wider pool of investors. In Japan, typically investors must buy a block of 100 shares in one company. At Nintendo’s old share price, that would cost a minimum of 5.97 million Japanese yen, or just over $41,200. With the split, 100 shares would cost 604,300 Japanese yen or just over $4,170 at Thursday’s closing price, potentially making it more affordable for individuals to invest in Nintendo.
“That minimum investment of around 6 million yen is enough to put a student through an entire four-year study program at a Japanese university,” Serkan Toto, CEO of Tokyo-based games consultancy Kantan Games, told CNBC.
“It was really about time for Nintendo as a consumer-facing company with such a strong brand recognition to reduce the share price.”
“Now, Nintendo is more affordable especially for younger people, a type of investor that has been growing in Japan in recent years,” he added.
A number of major tech firms, including Apple and Amazon, have announced stock splits over the past few years. While stock splits don’t fundamentally change the company in any way, they do make buying shares in the firm cheaper.
The split comes at a testing time for Nintendo, a 133-year-old company, amid broader challenges in the video game industry. In the second quarter of the year, Nintendo’s operating profit fell 15% while sales of its flagship Switch games console also declined. The Japanese gaming giant is facing supply chain challenges which is hampering its ability to meet demand for the Switch.
However, Nintendo games are still appealing to a wide range of consumers. The company said this month that sales of Splatoon 3 in Japan surpassed 3.45 million units — a domestic record for any Nintendo Switch software within the first three days of sales. Splatoon 3 was launched on Sept. 9.
Nintendo is also gearing up to release popular titles in the coming months including a new game in the Pokemon franchise.
Image and article originally from www.cnbc.com. Read the original article here.