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Sony Stock Reportedly Fell $10 Billion Following Drop in PS5 Sales Forecast

Sony Stock Reportedly Fell $10 Billion Following Drop in PS5 Sales Forecast - News

by William D'Angelo , posted on 02 March 2024 / 4,434 Views

Sony reportedly lost around $10 billion in value as the stock price has fallen following Sony cutting its PlayStation 5 forecast from 25 million units to 21 million units in the fiscal year ending March 2024, according to CNBC.

Analysts already believed Sony's target was too lofty say a bigger issue for Sony is the declining operating margins in the PlayStation business. Margins fell to just under six percent in the October to December quarter, which is down from over nine percent from same quarter in 2022.

"The shipment forecast cut for PS5 ... is not what is disappointing ... What is disappointing is the low level" of operating margins, says Jefferies equity analyst Atul Goyal. He says that before the January to March 2022 quarter, margins at PlayStation were around 12 to 13 percent for the previous four years.

Goyal says that "various tailwinds that should have driven up the margins towards 20 percent." The margins for the latest quarter were "extremely disappointing."

Goyal added, "Their rev (revenue) on digital sales, add-on-content, digital-downloads are at all time highs… And yet their margins are at decade-lows. This is just not acceptable."

The CEO and founder of Tokyo-based games consultancy Kantan Games Serkan Toto believes the reason for the drop in operation margins is due to the rising cost of video game production with Sony's biggest releases costing around $300 million to develop.

Sony Interactive Entertainment has shipped 54.8 million PS5 consoles as of December 31, 2023 with 8.2 million units shipped from October to December. This is up from 1.1 million from the same quarter in 2022.

However, the PlayStation 4 had shipped 9.7 million units in the same quarter for a lifetime total of 57.3 million units shipped as of December 31, 2016. This puts the PS5 behind shipped PS4 units by 2.5 million units.

A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.

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Wman1996 (on 19 February 2024)

It's probably also to do with
-The comments about little to no unannounced first-party games on the horizon for 2024. No Uncharted, no Ghost of Tsushima 2, no LittleBigPlanet 4, etc.
-Sony already mentioning PS5 is about to enter the latter half of its lifecycle. PS5 is only about to turn 3.5 years old in May. Even if it's replaced in November 2027 by PS6, it's such weird wording to act like PS5 dies right as PS6 launches. Even PS4 isn't technically discontinued yet despite turning 10 years old back in November. But for all we know, maybe Sony discontinued the PS4 at some point in 2023 and just hasn't confirmed it yet.

  • +5
Trentonater Wman1996 (on 19 February 2024)

There's nothing to suggest that there's no unnannounced first party games, The statement was just that there are none that are on the same scale as Spider-man or god of war in terms of existing franchise sales. If they announce a new twisted metal or astro bot nobody is expecting them to sell 20 million. In this context even Death Stranding 2 could release in the fiscal year as it isn't a "major" franchise either in terms of sales.

  • 0
aTokenYeti (on 19 February 2024)

It will be back up in due time, this is a fairly typical market over reaction. Investors are basically telling Sony 2 things:

  1. Sony must improve quarterly operating margins, particularly in the PlayStation division (this is actually an area they are will behind a Nintendo in, Sony makes less profit per year than Nintendo from PlayStation despite much higher revenue numbers)
  2. Investors want a higher cadence of Software releases
  • +4
Imaginedvl aTokenYeti (on 19 February 2024)

That^^ 100%

  • 0
KLAMarine aTokenYeti (on 19 February 2024)

"this is actually an area they are will behind a Nintendo in"

come again?

  • +1
aTokenYeti KLAMarine (on 19 February 2024)

Meant to say “well behind” but I’ve been on my phone and I don’t type very well on a phone keyboard.

In any case, yes, Sony Interactive Entertainment has worse operating margins than Nintendo. Sony’s own CEO has said that this is a problem they are looking to address. Based on other statements he made it’s clear he believes the culprit is the fact that turnaround times for Sony first party games are too long now, and also their budgets are too large.

  • +1
KLAMarine aTokenYeti (on 19 February 2024)

Typing by phone. I too know that pain.

  • 0
Qwark (on 19 February 2024)

Our economic system is based on growth and perhaps even more important profit growth. If profit or profit marges are declining, naturally shares drop even if you are still making big profits.


  • declining hardware sales from here on out.
  • No update on PS Plus, so probably no significant growth there.
  • PS5 entering latter half of life, basically means 7 year for this gen max.
  • no major first party sequels (which are a safe bet for investors).
  • declining profit margins.

    Not much for shareholders to be positive about. But if Q4 results from this fiscal year are better, stocks will probably rise quickly. After all stock prices are always affected by positive and negative news.

  • +3
Pemalite Qwark (on 19 February 2024)

Investors invest for future growth which nets a positive return on their investment.
Any impact to that and they pull out and go elsewhere.

This is only going to be a temporary impact as it's your normal eb-and-flow of the markets that respond to announcements and rumor.

For us, the consumer, it likely signals a push from investors for Sony to "do more" to garner additional revenue, which could potentially be a positive thing for the consumer if it means more games or a more competitive Sony .

  • -1
INCITATUSBR (on 19 February 2024)

Sony will get this money back from Madame Web's box office :P

  • +2
fedfed INCITATUSBR (on 20 February 2024)

the worst rated Marvel movie ever ahhahahh

  • +3
KratosLives (on 20 February 2024)

Why are games costing more to make when game engines have evolved so much with a lot of tools to make things easier to develop for. I thought the "time to triangle" was supposed to be near ps1/2 days, according to cerny

  • +1
Signalstar (on 19 February 2024)

Buying opportunity

  • +1
TeachMeHisty (on 20 February 2024)

If I remember correctly... didnt someone at Sony (before the PS5 launched) say, that it has a chance at selling multiple hundreds of million units (for some reason, the number 900m is floating in my mind)?
Guess that didnt age very well..

  • 0
Hynad TeachMeHisty (on 20 February 2024)

It’s your memory that isn’t aging well.

  • -1
hellobion2 (on 19 February 2024)

Shows how much playstation means for the sony brand as a whole.

  • 0
Kanemaru (on 19 February 2024)

Just stop that stupid censorship policy from the 70's and it will be a big improvment, even if there's been no exclusive for a while!

  • 0
DonFerrari (on 19 February 2024)

Yes we needed to have almost duplicate report for this =p

  • 0
ShadowLink93 (on 19 February 2024)

8.2 million in Q3 was lower than i anticipated, sell through seemed around 9 million which probably means they over shipped in the previous quarter.

  • -1
rapsuperstar31 (on 19 February 2024)

All the way down to December 2023 levels, rough shape indeed.

  • -2