Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is It “Game Over” for NVIDIA Corporation (NVDA) Stock?

NVIDIA Corporation (NASDAQ:NVDA)Today was supposed to be a big day for NVIDIA Corporation (NASDAQ:NVDA).

The graphics chip giant was set to roll out its state-of-the-art portable gaming console this morning. NVIDIA Corporation (NASDAQ:NVDA) Shield would have showcased the tech bellwether’s Tegra 4 chip. It would raise the bar on Android gaming. Perhaps more importantly for NVIDIA, it could’ve turned the company’s well-respected brand into a household name.

Well, it’s a dark day for NVIDIA. In a surprising move, NVIDIA Corporation (NASDAQ:NVDA) revealed yesterday that its first foray into handheld gaming hardware will be delayed until next month. NVIDIA stock slipped yesterday on the news after moving nicely higher earlier in the day.

“Some final quality-assurance testing has just turned up a mechanical issue that we’re not happy with,” NVIDIA posted yesterday in its company blog.

NVIDIA isn’t calling out the provider of the third-party mechanical component that forced it into this delay. NVIDIA Corporation (NASDAQ:NVDA) isn’t a snitch, and it’s hard to argue that the company that is best known for its graphics chips is a victim.

When did it know that there was a problem? If it was just now, why did it take so long? How much money will it have to spend to remedy this issue and repackage the devices?

Things already seemed potentially rocky last week when NVIDIA cut the gaming gadget’s price from $349 to $299. Portable gaming leaders Nintendo Co., Ltd (ADR) (OTCBB:NTDOY) and Sony Corporation (ADR) (NYSE:SNE) are no strangers to price cuts, but you’ve never seen either company push out a 14% discount just days before a new system’s release.

Since NVIDIA Corporation (NASDAQ:NVDA)’s been taking pre-orders and filling merchant orders from the small number of retailers committed to initially stocking NVIDIA Shield, it’s not a stretch to assume that soft demand was the catalyst for last week’s price cut.

However, when soft demand meets a defective supply, one has to wonder if NVIDIA will be able to bounce back from this.

NVIDIA’s stock has been trading north of $10 and south of $20 for more than two years. This could’ve been the consumer-facing product that would’ve broken NVIDIA stock out of this range to the upside, but now it has to prove to the market that last week’s desperate price cut and yesterday’s even more desperate delay can be overcome.

Nintendo and Sony are naturally loving this.

NVIDIA Shield could’ve been a game changer. Android games are cheap and plentiful. Nintendo Co., Ltd (ADR) (OTCBB:NTDOY) and Sony Corporation (ADR) (NYSE:SNE) count on developers paying them a cut of every title sold, and that’s just not the way that the Android world operates, as most games are free downloads. Even the premium titles don’t set gamers back the $30 to $40 that Nintendo 3DS and Sony PS Vita games fetch these days.

This naturally doesn’t mean that Nintendo Co., Ltd (ADR) (OTCBB:NTDOY) and Sony Corporation (ADR) (NYSE:SNE) can rest easy. The NVIDIA Corporation (NASDAQ:NVDA) Shield may face a harder road of consumer acceptance after this week’s delay, but Android gaming is here to stay — and play.

Someone will get it right, and the 3DS and PS Vita markets that were already struggling may be irreparably disrupted. It may not be NVIDIA, but someone will get Android gaming right sooner rather than later.

The article Is It “Game Over” for NVIDIA Stock? originally appeared on Fool.com and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Nintendo and NVIDIA.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Loading Comments...