Nintendo's stock is paying the price as investors fret over weaker Switch 2 sales in the US
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- Nintendo shares fell after a report said the company is slashing production of its Switch 2 console.
- Nintendo President Shuntaro Furukawa said recently that overseas hardware sales were weaker than expected.
- The stock's decline nearly erased a surprise rally from Nintendo's "Pokémon Pokopia" hit.
The move: Nintendo shares slid on Tuesday on worries about Switch 2 sales, nearly erasing recent gains. The company's stock fell 5% in Tokyo trading, while its US-listed ADRs were down more than 6% in afternoon trading.
Why: The stock fell after a report from Bloomberg said that the company is cutting Switch 2 console production to 4 million this quarter, from 6 million planned.
Nintendo has denied similar reports in the past. The company has not commented on the latest report at the time of writing and did not immediately respond to Business Insider's request for comment.
The reported production cut follows the Japanese company's weak console sales during its fiscal third-quarter earnings call. Nintendo President Shuntaro Furukawa said overseas sales were weaker than expected, while hardware sales in Japan exceeded projections.
What it means: The stock's fall on Switch 2 worries is squashing some of the optimism that recent game releases would spark a hardware-upgrade cycle.
Nintendo released "Pokémon Pokopia" on March 5, with the game's success fueling a rally in the stock.
The new Pokémon game, which isn't compatible with consoles older than the Switch 2 system, sold 2.2 million copies in the first four days after its launch.
Some industry observers have pushed back on the narrative that Switch 2 sales have struggled in the US.
Mat Piscatella, a video game industry analyst at consumer insights and data firm Circana, said in a post on Wednesday that the Switch 2 has been the second-fastest-selling console in the US since 1995, behind the Game Boy Advance.