- Following Sony’s quarterly financial report, the company’s shares nose-dived.
- Sony’s shares have fallen to a new low since February 2022.
- The main reason for this drop was Sony’s new sales target for the PS5 in Fiscal Year 2023.
Sony’s latest quarterly financial results were well below expectations. PlayStation generated record revenue, but profits were down, and PS5 sales disappointed Sony despite the console’s ability to move nearly 40K units every day.
Sony has revised its 25 million sales target for Fiscal Year 2023. The gaming giant now hopes to reach 21 million sales, but this cut has negatively impacted its share prices, leading to the biggest fall since February 2022.
Why it matters: The PlayStation division went through record success on paper last year. However, this result illustrates that Sony might not be able to rely on hardware sales alone to grow its business in the modern age.
Sony's share price is falling sharply after its earnings suggested harder time is ahead for its PlayStation. “If the platform has already peaked in growth then the outlook could be much grimmer than what even we had in mind,” Asymmetric Advisors says.https://t.co/sQSPElUUHC
— Takashi Mochizuki (@6d6f636869) February 15, 2024
Takashi Mochizuki from Bloomberg reports Sony shares fell by 8.4% on Thursday and closed at 6.5%. This fall reflects major changes in the company’s business moving forward, including the PlayStation division.
Sony also stated that PS5 console sales would decline in the future. According to the company, this console is now entering the second half of its lifespan, where console sales typically slow down.
PlayStation sells each console at slim margins, making it difficult to drop prices like past generations. This could lead to a sharp decline in sales this year, further worsening the situation.
On this note, a research note predicts a difficult situation for the gaming giant if this ends up being the case.
“If the platform has already peaked in growth then the outlook could be much grimmer than what we had in mind.
-Amir Anvarzadeh, Asymmetric Advisors strategist
He further said that Microsoft is fueled with cash, and its Game Pass subscription could prove highly disruptive to Sony. This does not seem far-fetched since Sony was the most concerned about Microsoft’s acquisition of Activision Blizzard.
Sony’s goal of 25 million sales in the Fiscal Year was always seen as overly ambitious.
Analysts expected it to sell 18.5 million units at best, but the revised target is still higher than this figure. While console sales reached over 8 million units last quarter, it remains to be seen whether PlayStation will be able to continue this momentum till March.
The President of Sony has also begun to explore other means of revenue for PlayStation. He recently expressed interest in growing first-party through other platforms, including PC and mobile.
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