Tech

Nintendo shares surge as company reports strong Switch Lite sales

Key Points
  • By the market close in Japan on Friday, Nintendo's stock skyrocketed 7.46%.
  • Those moves came after Nintendo announced on Thursday its operating profit doubled both on a year-on-year and quarter-on-quarter basis.
  • Between the Switch Lite's launch on Sept. 20 and the end of the quarter, Nintendo said it sold 1.95 million units of its handheld-only device.
Attendees play Super Mario video games on the Nintendo Co. exhibition stand at the Gamescom gaming industry event in Cologne, Germany, on Tuesday, Aug. 20, 2019.
Krisztian Bocsi | Bloomberg | Getty Images

Shares of Nintendo surged on Friday after the Japanese gaming company said Thursday that its second-quarter operating profit more than doubled amid strong sales for the recently launched Switch Lite device.

By Friday's market close in Japan, Nintendo's stock skyrocketed 7.46%.

Between the Switch Lite's launch on Sept. 20 and the end of the quarter, Nintendo said it sold 1.95 million units of its handheld-only device.

Sales figures for the Switch Lite — a stripped down and lower-priced version of Nintendo's flagship Switch console — are being closely watched by the market. Analysts previously told CNBC that the device was part of Nintendo's strategy to sell more than one Switch console to each household.

"We expect Switch Lite sales volume to reach 3 (million) full-year, so the 2Q sell-in total of 1.95 (million) was a surprise," the Morgan Stanley analysts said.

Meanwhile, 4.98 million units of the hybrid console Switch were sold in the six months to September.

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In a note following the release, analysts at Morgan Stanley said Nintendo's operating profit ratio of 24.6% for the second quarter was "well-above" levels seen in the same period a year ago at 14% as well as against the previous quarter's 15.9%. They said the improvement was "helped significantly" by recent installments in the Super Mario Maker, Fire Emblem and Legend of Zelda franchises.

The titles — Super Mario Maker 2, Fire Emblem: Three Houses and Legend of Zelda: Link's Awakening — have collectively sold 9.35 million units since launch, according to data from Nintendo. All three games have also been relatively well-received by critics, with every game holding a metascore beyond 85 on Metacritic, as of Nov. 1.

September also saw the highly-anticipated release of a mobile version of Mario Kart, a franchise that has consistently ranked among Nintendo's top selling games across its devices going back to at least its DS handheld, according to the latest data published by Nintendo on its investor relations site.

The game eclipsed previous titles in its launch month, with Mario Kart Tour being downloaded more than 123 million times in the period, according to data from Sensor Tower Store Intelligence. Still, the average revenue for the title remains low, with an average of 26 cents spent per player, according to Sensor Tower. In comparison, another Nintendo title Dragalia Lost earned $16.50 per player in its first month.