(Bloomberg) – Surprising share split plan from Japanese game maker Nintendo Co. it can only provide a fleeting boost to its shares as fears about the company’s profits continue.
Shares of Mario’s creator jumped 4.5 percent on Wednesday morning, a day after the 10-to-1 split was announced. and slowing down the search on the Switch console.
The division of shares usually provides an increase in share prices – as seen in the case of Tesla Inc. and Alphabet Inc. – as this move puts the counters within the reach of retail investors. Based on Tuesday’s close, the minimum investment account – 100 shares – for Nintendo shares is 5.64 million yen ($ 43,273), well above the Tokyo Stock Exchange’s guidance of 50,000 to 500,000 yen.
“In general, there is no rational reason to believe that the division of shares is positive for share prices,” said Kenichi Hirayama, chief strategist at Tokio Marine Asset Management Co. “If it has any effect, it should only be temporary.”
This is confirmed by the recent record for the division of shares by large Japanese companies. Among the companies with a market capitalization of more than $ 50 billion, which have carried out the division of shares since 2015, only Keyence Corp. rose then.
However, Nintendo shares can enjoy significant profits in a short period of time.
“Now that the shares have split, investors can buy them for about 560,000 yen, which will be easier for them to reach,” said Tomoitiro Kubota, senior market analyst at Matsui Securities Co. He noted that the amount of regular investment for an individual investor will be 300 000-400 000 yen.
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