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Sony shares plunge as chip crunch hits PlayStation 5


This photo illustrates the PlayStation 5 logo displayed on a smartphone.

Mateusz Slodkowski | SOPA Images | LightRocket via Getty Images

SonyThe year has started with a difficult start for Sony, the Japanese company cutting sales forecasts on its PlayStation 5 console. It also faces a greater challenge from its rivals. Microsoft.

According to data from Refinitiv, shares of the company have fallen by 13% over the past year. The company has lost approximately $25.71 trillion in value.

Sony lowered its PS5 full-year sales goal from 14.8M units to 11.5M units on Wednesday. Sony sold 3.9 million PS5 consoles during the December quarter, compared to 4.5 million units in the same quarter of 2020.

Sony shares the same problem as many consumer electronics firms and automakers with global semiconductor shortages. Sony can’t produce enough consoles, despite the strong consumer demand.

Serkan Toto CEO, Tokyo-based Kantan Games said, “There’s no demand issue whatsoever.”

The downgrade caused a drop of 6% in Sony Japan-listed shares Thursday. Sony’s gaming business posted revenue of 813.3 trillion Japanese yen ($7.08billion), an 8% decrease year-on-year. In its current fiscal year that ends March 31, Sony also reduced its forecasted sales for its gaming division by 170 billion to 2.73 trillion Japanese yen.

Sony did not release any large games in the December quarter of Q3 (December quarter). This year, the company has shifted its entire firepower. Toto stated that the market overreacted once more and that swings in stock prices were too severe.

Sony isn’t the only one struggling to produce consoles. The console production crisis was highlighted by the announcement on Thursday Nintendo cut its forecast for sales of its Switch console.

The stock dropped on Thursday despite Sony recording an overall increase in revenue and operating profits for the quarter. This was due to Sony’s success with “Spider-Man: No Way Home” and its image sensor company.

Rising competition

Sony’s shares have been hit hard by Microsoft’s growing competition this year. The stock dropped last month. Microsoft announced plans to buy Call of Duty maker ActivisionTo boost its Xbox gaming business, it paid $68 billion.

On fears that Microsoft will offer a proposal to the U.S. company, Sony shares plunged by more than 12% following Microsoft’s announcement. The Japanese giant has been trailing it for some time. now mount a serious challenge.

Days later Sony agreed to buy Destiny and Halo developer BungieFor $3.6 Billion

Sony has invested in “first-party content” for many years. This includes building its studios and buying other developers. It has managed to remain ahead of Microsoft.

Toto maintained that the increasing competition does not impact Sony’s position as a leader in stock market.

Toto explained that even after Activision announced the PlayStation 5, Sony’s PlayStation 5 was still the king and there is not any indication of this changing anytime soon.

My outlook is that Sony will be much more successful going forward. I am looking at the product pipeline in the coming weeks as well as their bullish plans to launch first-party and live-service gaming.

These games, known as live-services, have an extended life span due to the constant updates that developers provide. Sony revealed this week that 10 more live-service gaming titles will be launched by the end of March 2026.