Sony Stock Reportedly Fell $10 Billion Following Drop in PS5 Sales Forecast - News
by William D'Angelo , posted on 02 March 2024 / 4,981 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.