Sony Loses Games Privileges

Sony and Nintendo have weak quarters

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What's going on?

Shares of Japanese tech company Sony fell 8% on Monday after it reported a weaker-than-forecast quarterly update late on Friday, leaving some investors looking for the reset button.

What does this mean?

Sonys spent years shifting its business away from selling televisions, aiming to become a more profitable entertainment company. Indeed, its purchase of EMI Music Publishing last year made it the worlds largest music publisher. But slow hardware sales left Sony feeling the pinch once again, missing investors profit expectations for the last quarter. At age six, Sony reckons the PlayStation 4s in its golden years perhaps worrying investors, but whetting the appetite of consumers looking forward to the PlayStation 5.

Why should I care?

For markets: Investors arent playing with gaming stocks.

As well as selling off Sonys shares, investors ditched rival Nintendos stock too. Late last week, Super Marios maker announced a better-than-expected quarterly profit. But, as some analysts predicted in November, the company said it wouldnt sell as many units of its latest console as it previously thought and that sales of its older handheld console would be lower than expected, too, as it faces the same age-related challenge as Sonys PlayStation 4. Sony can somewhat fall back on subscription revenue from its PlayStation Network (which, in 2018, eclipsed Nintendos entire revenue) but Nintendo cant. Its not taking nearly as much advantage of the rising amount of time (and money) people spend gaming.

Zooming out: Looking west to China.

According to the Institute of International Finance, international investors bought some $9 billion worth of Chinese stocks in January the most ever in a single month. Investors might be anticipating Chinese government support (to boost the countrys slowing economic growth) will have a positive effect as it did back in 2015 and 2016. And, with US trade negotiations seemingly headed in the right direction, Chinese stocks may be in for another boost. That would be a Happy New Year indeed ??

Originally posted as part of the Finimize daily email.

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