Nintendo shares surge 5 percent following report of new console models

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Shares of video game maker Nintendo surged on Tuesday following a report that the company would be releasing new versions of its blockbuster Switch console as soon as this year.

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Nintendo’s stock started to skyrocket in the morning, surging beyond 5 percent, though some of those gains were retraced in the afternoon. It last traded higher by 4.86 percent.

The news came after the Wall Street Journal reported on Monday that Nintendo is set to release two new versions of its bestselling console, launched in 2017, “as early as this summer.”

The Journal report, which cited suppliers and developers for Nintendo, said one of the new versions will have improved features aimed at ardent gamers. The other model would be a cheaper variant geared towards casual players, touted as a successor for Nintendo’s hand-held 3DS console, long due for an upgrade as it was launched in 2011.

The two new versions of Switch are expected to be announced in June, with a potential launch coming a few months later, according to the Wall Street Journal.

The report also said electronics maker Sharp was expected to supply liquid-crystal displays for the new variants of Switch. Shares of Sharp jumped 3.9 percent in afternoon trade.

Switch, marketed as a hybrid console enabling gamers to play on-the-go and at home when connected to a TV, has been an important revenue driver for Nintendo that turned the company’s fortunes around after its previous flagship model, the Wii U, suffered from lackluster demand.

Based on Nintendo’s track record on the life cycle of previous console upgrades, the possibility of a new version of Switch being released was “quite high,” Takao Suzuki, an analyst at Daiwa Securities, told CNBC in an email.

Kazunori Ito, senior equity analyst at Ibbotson Associates Japan, said it would make sense for Nintendo to launch a cheaper model of Switch, as that would suit its strategy to sell more than one such console per household.

“Overall, I assume that Nintendo’s strategy is to maximize the lifetime of (the) Switch console, and I believe that launching two different version will contribute (towards) achieving the target,” he said.

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