The Switch is doing rather well, but Nintendo’s stock hasn’t been of late. The company’s share price has dropped 27 percent since hitting its peak in May, and a new report has revealed that one trader has been making a huge bet against the company.
A report from Bloomberg has noted that Melvin Capital Management has assembled a short position against Nintendo worth $540 million ($US400 million).
The latest filing on the Tokyo Stock Exchange revealed that Melvin Capital shorted 1.2 million shares — approximately 0.8 percent of the Nintendo’s entire outstanding stock. It’s the largest position against the Japanese console manufacturer and developer since 2013.
The AFR added that Melvin Capital had increased the size of their short position after E3. The same day Nintendo held their E3 showcase, Bloomberg Technology interviewed Nintendo of America president Reggie Fils-Aime about the company’s declining stock price.
Fils-Aime responded by saying that Nintendo had more surprises up their sleeve, and implied that analysts were being shortsighted given that Nintendo uses E3 to showcase games and updates that are coming out over the next six to nine months. “We believe there’s a lot more value for the consumer to tell them about content, and then launch it, just like Fortnite,” the NoA president and COO said at the time.
It’s intriguing given that the rest of the year looks relatively good for Nintendo. While there isn’t another Zelda, main Mario or Metroid Prime on the roster, the company’s online network is due to launch in September. Morgan Stanley MUFG analysts estimated that’ll recoup about $232 million (¥19.2 billion) in operating profit over the 2019-2020 fiscal year. On top of that, Pokemon: Let’s Go! is due to launch just before the Black Friday sales, and the console will get a new Mario Party and the return of Smash Bros just before Christmas, as well as notable third party titles like Dark Souls Remastered.
Still, that hasn’t stopped Melvin Capital from taking a huge position against the home of Mario. Fingers crossed their position is just based on market trends, and nothing that might materially impact the games we know and love.