Shares of video game company Nintendo (OTC: NTDOY) dropped on Tuesday after the company reported financial results. The Japanese company reports infrequently but provided numbers for the most recent six-month period. Investors weren't too thrilled and Nintendo stock was consequently down about 3% as of 10:20 a.m. ET. But it had been down closer to 5% earlier in the day.

The Nintendo Switch isn't selling as hoped

Nintendo sells video games and has tons of monetizable intellectual property. But the bread and butter of this business is video game consoles. Right now, the current hardware is the Nintendo Switch and it's eight years old. Given its age, it's not surprising that sales are waning.

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The first half of Nintendo's fiscal 2025 ended on Sept. 30. And during that six-month period, net sales were down 34% from the comparable period of its fiscal 2024 and operating profit fell 57%. Moreover, the company sold fewer than 5 million units of its Switch console during this time, down 31%.

Given the lackluster sales in the first half of fiscal 2025, Nintendo is lowering its full-year guidance for Switch sales. Previously it hoped to sell 13.5 units in fiscal 2025. Now it's hoping to sell 12.5 million, which obviously lowered its revenue and profit expectations as well. This is why the stock is down.

When does Switch 2 come out?

As is tradition, Nintendo's management is being cagey regarding details for a successor to the Nintendo Switch -- the unofficial name is the "Switch 2." But as reported by Reuters, management says it still hopes to release the new console before the end of fiscal 2025 in March.

Investors might have preferred for Nintendo to release Switch 2 in time for the holiday shopping season. But that's looking unlikely at this point. That said, sooner or later, the company will update its hardware. And the performance of that device will be extremely material for investors because it can drive the business for nearly a decade, as evidenced by the Nintendo Switch.

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