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Switch catapults Nintendo's market cap past Sony's

Investors rally to the shares on expected boost in game console's output

Nintendo plans to ramp up shipments of the Switch in July and August.

OSAKA -- Nintendo's market capitalization hit 5.44 trillion yen ($48.9 billion) on Friday, surpassing Sony's for the first time in 11 months, as the soaring popularity of its Switch console drew investors to the game developer's stock.

The Kyoto-based company's market cap reached the highest since October 2008. 

Nintendo shares rose 3% on the Tokyo Stock Exchange to 38,580 yen, reaching a year-to-date high for a second day, before closing at 38,440 yen. Investors rushed to buy after the company said Thursday that it will ramp up shipments of the Switch in July and August amid a shortage.

While the game developer initially planned to sell 10 million Switch consoles in the year ending March 2018, investors are "widely anticipating production to exceed plans," says Masahiro Ono of Morgan Stanley MUFG Securities.

Furthermore, strong buying by retail investors appears to have offset selling by U.S. investment adviser Capital Research and Management. According to a report submitted Friday, the U.S. firm had lowered its stake from 10.39% to 9.31%.

Meanwhile, a rise in Sony shares has been underpinned by its PlayStation 4 game console, cumulative sales of which have exceeded 60 million units. But with the new lineup of Switch games expected out by "the end-of-year sales season, that will start to eat into demand for the PS4," said the Japan-based Ace Research Institute.

Analysts expect Nintendo to book a net profit of 93.1 billion yen -- double the company's own projections -- for the current fiscal year ending in March. Some suspect the stock is overheating as the company's forward price-earnings ratio climbs past 100.


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