We recently reported that Nintendo’s stock had climbed as a result of expectations that the company would be included into the Nikkei 225, Japan’s prestigious equivalent to the Dow Jones Industrial Average. In a turn of events, Nintendo has not been added to the group of 225 blue-chip companies of the Tokyo Stock Exchange that make up the Nikkei, and as a result, the company’s shares fell 8.4% to 10,980 yen.
After transferring its listing from Osaka to Tokyo, investors had long speculated that the video game giant would become one of the 225 companies that make up the Nikkei, a revolving index that includes Toyota, Sony, and Yamaha, among others. In 2013, Nintendo’s stock has risen 31% because of these expectations, and was predicted to continue climbing following the announcement of the 2DS and a Wii U price drop. Instead, its 7.3% decline is the biggest drop experienced by Nintendo in over two years.
Only time will tell if Nintendo is able to bounce back from these new developments and the free-falling sales of its flagship Wii U console. In a recent report, Tokyo analyst Takao Suzuki summed up Nintendo’s exclusion from the Nikkei as follows:
“We believe Nintendo’s shares have been overvalued due to speculative demand, on the assumption that they would be included in the Nikkei. As this expectation has come to nothing, this appears to be the right time to sell.”