Nintendo Co.'s surprise stock split plan may provide only a fleeting boost to its shares as concerns about the company's earnings outlook persist.
The stock of the Mario creator jumped as much as 4.5% in Wednesday morning trade, a day after the 10-for-1 split was announced. The impact of a global chip shortage and slowing demand for the Switch console were reflected in the company's forecast full-year operating income which trailed analysts' estimates.
The stock splits of companies likeTesla andAlphabet give a lift to share prices as they put the counter within the reach of retail investors. The minimum investment lot for Nintendo's stock is far above the Tokyo Stock Exchange's guidelines.
There is no reason to think that a stock split will help stock prices.
The recent record of stock splits by big Japanese firms shows that. Keyence Corp., which has a market cap of more than $50 billion, rallied after conducting a stock split in 2015.
| Company Name | Announced date | Relative Performance (Vs. Topix) | Actual performance. (%) | Split Ratio | ||
| 1 day | 1 month | 1 day | 1 month | |||
| Toyota Motor Corp. | 5/12/2021 | 0.00 | 11.65 | -1.54 | 15.70 | 5 to 1 |
| Nippon Telegraph & Telephone Corp. | 11/5/2019 | -3.59 | -0.71 | -3.57 | 0.31 | 2 to 1 |
| Keyence Corp. | 10/31/2019 | 8.24 | 6.86 | 8.21 | 8.81 | 2 to 1 |
| SoftBank Group Corp. | 5/9/2019 | -5.33 | -13.42 | -5.41 | -14.60 | 2 to 1 |
| Recruit Holdings Co. | 5/12/2017 | 2.56 | 0.15 | 2.52 | 0.84 | 3 to 1 |
| KDDI Corp. | 1/30/2015 | -2.89 | -8.56 | -3.34 | -0.88 | 3 to 1 |
Nintendo's shares may have a brief spell of gains.
Now that the stocks have split, investors can buy it at around 560,000 yen, which will be easier for them to reach, said Tomoichiro Kubota, senior market analyst at Matsui Securities Co.
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