Treasurys hit 5% in wake of Moody's downgrade
The return on 30-year Treasurys rose as much as 0.13 percentage points to 5.03% as at 5:30 a.m. ET to the highest level since late 2023.
The 10-year yield also rose about 10 basis points to 4.5%. When yields rise, the price of the bond decreases.
"If we stay at these levels this would be a higher yield than that seen at the worst close after Liberation Day," Jim Reid, managing director and head of global macro and thematic research at Deutsche Bank, said in a note on Monday.
The previous triple-A rating signified that an economy poses minimal risk and is in a good position to repay its debts. Aa1 is the second-highest rating and indicates a country is subject to very low credit risk. Other countries with the top rating include the European Union, Canada, and Germany.
"Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's said in a statement.
The ratings agency said it expected federal debt to rise from 98% of gross domestic product in 2024 to about 135% by 2035.
S&P was the first agency to downgrade the US from the top score in August 2011.
"The combination of diminished appetite to buy US assets and the rigidity of a US fiscal process that locks in very high deficits is what is making the market very nervous," George Saravelos, Deutsche Bank's head of FX research, said in a note on Monday.
He added that a key problem for the US was bond and currency markets failing to properly price in fiscal risks.
S&P 500 futures fell more than 1% in premarket trading, while Nasdaq futures were down more than 1.5% and Dow futures shed close to 1%.
"US-related stocks and investment trusts dominated the list of losers on Monday morning in London, while precious metals miners were higher as gold and silver prices moved up and the dollar weakened," AJ Bell investment director Russ Mould wrote in a Monday note.
"Significantly, the US 30-year Treasury yield flashed a warning signal as it hit the 5% mark for the first time since April, with the proposed tax cuts making their way through Congress, expected in some quarters to increase the US deficit."
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25 minutes ago
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Hello Group Inc. Announces Unaudited Financial Results for the First Quarter of 2025
BEIJING, June 5, 2025 /PRNewswire/ -- Hello Group Inc. (NASDAQ: MOMO) ("Hello Group" or the "Company"), a leading player in Asia's online social and entertainment space, today announced its unaudited financial results for the first quarter of 2025. First Quarter of 2025 Highlights Net revenues decreased by 1.5% year over year to RMB2,520.8 million (US$347.4 million*) in the first quarter of 2025. Net revenues from overseas increased by 71.9% year over year to RMB414.6 million (US$57.1 million) in the first quarter of 2025. Net income attributable to Hello Group Inc. increased to RMB358.0 million (US$49.3 million) in the first quarter of 2025, from RMB5.2 million in the same period of 2024. Non-GAAP net income attributable to Hello Group Inc. (note 1) increased to RMB403.8 million (US$55.6 million) in the first quarter of 2025, from RMB59.9 million in the same period of 2024. 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First Quarter of 2025 Financial Results Net revenues Total net revenues were RMB2,520.8 million (US$347.4 million) in the first quarter of 2025, a decrease of 1.5% from RMB2,560.4 million in the first quarter of 2024. Starting from the first quarter of 2025, the Company combined the live video service and value-added services lines, which are now collectively referred to as value-added services. This change reflects the increasing convergence of the two business lines in terms of user mentality and product format. The combined reporting more accurately reflects user behavior and spending across the Company's social entertainment ecosystem. Additionally, the Company consolidated mobile marketing services, mobile games and other services, which are now collectively reported under "other services." Value-added service revenues mainly include virtual gift revenues from various audio, video and text- based scenarios, and membership subscription revenues. 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Non-GAAP income from operations (note 1) was RMB345.3 million (US$47.6 million) in the first quarter of 2025, compared to RMB515.0 million during the same period of 2024. Income tax expenses Income tax expenses were RMB70.4 million (US$9.7 million) in the first quarter of 2025, compared to RMB557.6 million in the first quarter of 2024. The decrease in income tax expenses was primarily due to the accrual in the first quarter of 2024 of withholding income tax of RMB448.6 million associated with historical undistributed earnings generated by our wholly-foreign owned enterprise. Net income Net income was RMB358.5 million (US$49.4 million) in the first quarter of 2025, compared to RMB5.2 million during the same period of 2024. Non-GAAP net income (note 1) was RMB404.3 million (US$55.7 million) in the first quarter of 2025, compared to RMB59.9 million during the same period of 2024. Net income attributable to Hello Group Inc. Net income attributable to Hello Group Inc. was RMB358.0 million (US$49.3 million) in the first quarter of 2025, compared to RMB5.2 million during the same period of 2024. Non-GAAP net income (note 1) attributable to Hello Group Inc. was RMB403.8 million (US$55.6 million) in the first quarter of 2025, compared to RMB59.9 million during the same period of 2024. Net income per ADS Diluted net income per ADS was RMB2.07 (US$0.29) in the first quarter of 2025, compared to RMB0.03 in the first quarter of 2024. Non-GAAP diluted net income per ADS (note 1) was RMB2.34 (US$0.32) in the first quarter of 2025, compared to RMB0.31 in the first quarter of 2024. Cash and cash flow As of March 31, 2025, the Company's cash, cash equivalents, short-term deposits, long-term deposits, short-term restricted cash and long-term restricted cash totaled RMB12,785.9 million (US$1,761.9 million), compared to RMB14,728.5 million as of December 31, 2024. Net cash provided by operating activities in the first quarter of 2025 was RMB239.7 million (US$33.0 million), compared to RMB400.2 million in the first quarter of 2024. Change in Segment Reporting Effective from the first quarter of 2025, the Company implemented the strategic decision to integrate the operations of Momo, Tantan, and QOOL into a unified business structure, and as a result, changed its segment disclosure from three operating segments to a single operating segment. This change reflects the Company's strategic focus and aligns with the financial information that the Company's chief operating decision maker currently receives and uses to allocate resources and assess performance of the Company. Prior period segment information has been retrospectively revised to conform to the current presentation. Recent Development Payment of a special cash dividend In March 2025, Hello Group's board of directors declared a special cash dividend in the amount of US$0.30 per ADS, or US$0.15 per ordinary share. The cash dividend was paid in April 2025 to shareholders of record at the close of business on April 11, 2025. The aggregate amount of cash dividends paid was US$47.9 million. Share repurchase program As of June, 5, 2025, the Company has repurchased 47.8 million ADSs for US$291.3 million on the open market under Share Repurchase Program announced on June 7, 2022 and amended on March 14, 2024 and March 12, 2025, at an average purchase price of US$6.07 per ADS. The remaining size of the program is USD $194.8 million. Business Outlook For the second quarter of 2025, the Company expects total net revenues to be between RMB2.57 billion to RMB2.67 billion, representing a decrease of 4.5% to 0.8% year over year. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change. Note 1: Non-GAAP measures To supplement our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), we, Hello Group, use various non-GAAP financial measures that are adjusted from the most comparable GAAP results to exclude share-based compensation and amortization of intangible assets from business acquisitions, and such adjustments has no impact on income tax. Reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures are shown in tables at the end of this earnings release, which provide more details about the non-GAAP financial measures. Our non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the historical and current financial performance of our continuing operations and our prospects for the future. Our non-GAAP financial information should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to the GAAP results. In addition, our calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited. Our non-GAAP information (including non-GAAP cost and operating expenses, income from operations, net income, net income attributable to Hello Group Inc., and diluted net income per ADS) is adjusted from the most comparable GAAP results to exclude share-based compensation and amortization of intangible assets from business acquisitions, and such adjustments has no impact on income tax. A limitation of using these non-GAAP financial measures is that share-based compensation and amortization of intangible assets from business acquisitions have been and will continue to be for the foreseeable future significant recurring expenses in our results of operations. We compensate for such limitation by providing reconciliations of our non-GAAP measures to our U.S. GAAP measures. Please see the reconciliation tables at the end of this earnings release. Conference Call Hello Group's management will host an earnings conference call on Thursday, June 5, 2025, at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing / Hong Kong Time on June 5, 2025). Participants can register for the conference call by navigating to: Upon registration, each participant will receive details for the conference call, including dial-in numbers, conference call passcode and a unique access PIN. Please dial in 10 minutes before the call is scheduled to begin. A telephone replay of the call will be available after the conclusion of the conference call through June 12, 2025. The dial-in details for the replay are as follows: U.S. / Canada: 1-855-883-1031 Hong Kong: 800-930-639Passcode: 10047425 Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of Hello Group's website at About Hello Group Inc. We are a leading player in Asia's online social networking space. Through Momo, Tantan and other properties within our product portfolio, we enable users to discover new relationships, expand their social connections and build meaningful interactions. Momo is a mobile application that connects people and facilitates social interactions based on location, interests and a variety of online recreational activities. Tantan, which was added into our family of applications through acquisition in May 2018, is a leading social and dating application. Tantan is designed to help its users find and establish romantic connections as well as meet interesting people. Starting from 2019, we have incubated a number of other new apps, such as Hertz, Soulchill, and Duidui, which target more niche markets and more selective demographics. For investor and media inquiries, please contact: Hello Group Inc. Investor RelationsPhone: +86-10-5731-0538Email: ir@ Christensen In ChinaMs. Xiaoyan SuPhone: +86-10-5900-1548E-mail: In U.S. Ms. Linda BergkampPhone: +1-480-614-3004Email: Safe Harbor Statement This news release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to our management quotes, our financial outlook for the second quarter of 2025, as well as the amount of, timing, methods and funding sources for repurchases of our shares under the share repurchase program. Our forward-looking statements are not historical facts but instead represent only our belief regarding expected results and events, many of which, by their nature, are inherently uncertain and outside of our control. Our actual results and other circumstances may differ, possibly materially, from the anticipated results and events indicated in these forward-looking statements. Announced results for the first quarter of 2025 are preliminary, unaudited and subject to audit adjustment. In addition, we may not meet our financial outlook for the second quarter of 2025 and may be unable to grow our business in the manner planned. We may also modify our strategy for growth. Moreover, there are other risks and uncertainties that could cause our actual results to differ from what we currently anticipate, including those relating to our ability to retain and grow our user base, our ability to attract and retain sufficiently trained professionals to support our operations, our ability to anticipate and develop new services and enhance existing services to meet the demand of our users or customers, the market price of the Company's stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company's cash flows from operations, general economic conditions, and other factors. For additional information on these and other important factors that could adversely affect our business, financial condition, results of operations, and prospects, please see our filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, after the date of this release, except as required by law. Such information speaks only as of the date of this release. Hello Group Inc. Unaudited Condensed Consolidated Statement of Operations (All amounts in thousands, except share and per share data)Three months Ended March 31202420252025RMBRMBUS$ Net revenues(i):Value-added service 2,532,9172,489,902343,118 Other services 27,50330,9334,262 Total net revenues 2,560,4202,520,835347,380 Cost and expenses:Cost of revenues (1,503,008)(1,569,074)(216,224) Research and development (192,191)(195,769)(26,978) Sales and marketing (293,431)(329,178)(45,362) General and administrative (131,381)(140,511)(19,363) Total cost and expenses (2,120,011)(2,234,532)(307,927) Other operating income, net 19,90613,1821,817 Income from operations 460,315299,48541,270 Interest income 121,107120,33816,583 Interest expense (23,698)(30,659)(4,225) Other gain or loss, net (9,245)-- Income before income tax and share of income on equity methodinvestments 548,479389,16453,628 Income tax expenses (557,613)(70,406)(9,702) (Loss) income before share of income on equity methodinvestments (9,134)318,75843,926 Share of income on equity method investments 14,31839,7315,475 Net income 5,184358,48949,401 Less: net income attributable to non-controlling interest -49568 Net income attributable to the shareholders of Hello Group Inc. 5,184357,99449,333 Net income per share attributable to ordinary shareholdersBasic 0.011.050.15 Diluted 0.011.040.14 Weighted average shares used in calculating net income per ordinaryshareBasic 374,650,649339,405,347339,405,347 Diluted 389,278,806345,905,274345,905,274 (i) The following table presents revenues by geographic area based on the addresses of our customers of our users: Three months Ended March 31 202420252025RMBRMBUS$ Chinese mainland 2,319,2232,106,233290,247 Overseas 241,197414,60257,133 Total 2,560,4202,520,835347,380 Hello Group Inc. Unaudited Condensed Consolidated Statement of Comprehensive Income (All amounts in thousands, except share and per share data) Three monthsEnded March 31 202420252025 RMBRMBUS$Net income 5,184358,48949,401Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 54,894(43,338)(5,972)Comprehensive income 60,078315,15143,429Less: comprehensive income (loss) attributed to the non-controllinginterest 3,084(599)(83)Comprehensive income attributable to Hello Group Inc. 56,994315,75043,512 Hello Group Inc. Unaudited Condensed Consolidated Balance Sheets (All amounts in thousands, except share and per share data)December 31March 31March 31202420252025 RMB RMBUS$ AssetsCurrent assetsCash and cash equivalents 4,122,6595,381,833741,636 Short-term deposits 2,026,245762,835105,121 Restricted cash 4,566,4772,637,531363,461 Accounts receivable, net of allowance for credit losses of RMB12,433 andRMB17,427 as of December 31, 2024 and March 31, 2025, respectively 192,317222,21330,622 Prepaid expenses and other current assets 1,104,1721,099,969151,580 Total current assets 12,011,87010,104,3811,392,420 Long-term deposits 3,059,8603,051,340420,486 Long-term restricted cash 953,285952,391131,243 Right-of-use assets, net 252,169216,05429,773 Property and equipment, net 897,036916,423126,286 Intangible assets, net 86,661191,92726,448 Rental deposits 13,28013,3871,845 Long-term investments 825,533863,342118,972 Other non-current assets 110,960133,42018,386 Deferred tax assets 36,06635,7264,923 Goodwill 136,250249,41234,370 Total assets 18,382,97016,727,8032,305,152 Liabilities and equityCurrent liabilitiesAccounts payable 615,254619,82485,414 Deferred revenue 427,702437,35160,269 Accrued expenses and other current liabilities 704,410652,23489,880 Lease liabilities due within one year 141,971127,76517,606 Income tax payable 157,05756,5657,795 Deferred consideration in connection with business acquisitions-current 28,02727,8633,840 Convertible Senior Notes-current 20,19120,0902,768 Dividends payable -347,40347,873 Long-term borrowings, current portion 1,938,3851,939,245267,235 Short-term borrowings 2,365,535675,00093,017 Total current liabilities 6,398,5324,903,340675,697 Deferred consideration in connection with business acquisitions-non current 65,69465,3109,000 Lease liabilities 115,10592,33812,725 Deferred tax liabilities 241,915254,53035,075 Long-term borrowings -3,227445 Other non-current liabilities 129,051143,55219,782 Total liabilities 6,950,2975,462,297752,724 Shareholder's equity (ii) 11,432,67311,265,5061,552,428 Total liabilities and shareholder's equity 18,382,97016,727,8032,305,152 (ii): As of March 31, 2025, the number of ordinary shares outstanding was 321,338,936. Hello Group Inc. Unaudited Condensed Consolidated Statement of Cash Flows (All amounts in thousands, except share and per share data)Three monthsEnded March 31202420252025RMBRMBUS$ Cash flows from operating activities:Net income 5,184358,48949,401 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation of property and equipment 14,31012,3911,708 Amortization of intangible assets 1,2796,191853 Share-based compensation 54,67040,8605,631 Share of income on equity method investments (14,318)(39,731)(5,475) Returns on investments -50870 Loss on long-term investments 9,245-- Gain or loss on disposal of property and equipment 258(102)(14) Provision of loss on receivable and other assets 1,7765,405745 Changes in operating assets and liabilities:Accounts receivable 10,980(19,144)(2,638) Prepaid expenses and other current assets (9,677)11,3751,568 Rental deposits (802)(110)(15) Deferred tax assets (2,498)34047 Other non-current assets (7,597)35,0464,829 Accounts payable (17,454)(13,543)(1,866) Income tax payable 6,036(100,979)(13,915) Deferred revenue 16,6749,0351,245 Accrued expenses and other current liabilities (56,800)(70,983)(9,782) Deferred tax liabilities 365,01112,7131,752 Other non-current liabilities 23,893(8,040)(1,108) Net cash provided by operating activities 400,170239,72133,036 Cash flows from investing activities:Purchase of property and equipment (44,176)(27,814)(3,833) Payment for business acquisition -(194,390)(26,788) Cash received on maturity of short-term deposits 300,0001,107,245152,582 Purchase of long-term deposits (718,860)-- Cash received on maturity of long-term deposits 718,860150,00020,671 Cash received from sales of long-term investment 2,000-- Loan to a third-party company -(27,478)(3,787) Other investing activities 38519226 Net cash provided by investing activities 258,2091,007,755138,871 Cash flows from financing activities:Proceeds from exercise of share options 112- Repurchase of ordinary shares (112,261)(201,529)(27,771) Proceeds from short-term borrowings 1,331,635-- Repayment of short-term borrowings (215)(1,690,535)(232,962) Repayment of long-term borrowings -(395)(54) Net cash provided (used in) by financing activities 1,219,170(1,892,457)(260,787) Effect of exchange rate changes 20,814(25,685)(3,541) Net increase (decrease) in cash and cash equivalents 1,898,363(670,666)(92,421) Cash, cash equivalents and restricted cash at the beginning of period 8,282,9129,642,4211,328,761 Cash, cash equivalents and restricted cash at the end of period 10,181,2758,971,7551,236,340 Hello Group Inc. Reconciliation of Non-GAAP financial measures to comparable GAAP measures (All amounts in thousands, except per share data)1. Reconciliation of Non-GAAP cost and operating expenses, income from operations, and net income to comparable GAAP monthsThree monthsThree months Ended March 31, 2024Ended March 31, 2025Ended March 31, 2025GAAP Share-basedcompensation Non-GAAPGAAP Amortization ofintangible assetsfrom businessacquisitions Share-basedcompensation Non-GAAPGAAP Amortization ofintangible assetsfrom businessacquisitions Share-basedcompensation Non-GAAP RMB RMB RMB RMB RMB RMB RMB US$ US$ US$ US$ Cost of revenues (1,503,008) 1,882 (1,501,126)(1,569,074) 1,263 1,774 (1,566,037)(216,224) 174 244 (215,806) Research and development (192,191) 8,786 (183,405)(195,769) 859 9,060 (185,850)(26,978) 118 1,249 (25,611) Sales and marketing (293,431) 6,117 (287,314)(329,178) 2,790 4,311 (322,077)(45,362) 384 594 (44,384) General and administrative (131,381) 37,885 (93,496)(140,511) - 25,715 (114,796)(19,363) - 3,544 (15,819) Cost and operating expenses (2,120,011) 54,670 (2,065,341)(2,234,532) 4,912 40,860 (2,188,760)(307,927) 676 5,631 (301,620) Income from operations 460,315 54,670 514,985299,485 4,912 40,860 345,25741,270 676 5,631 47,577 Net income attributable to Hello Group Inc. 5,184 54,670 59,854357,994 4,912 40,860 403,76649,333 676 5,631 55,640 View original content: SOURCE Hello Group Inc. 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25 minutes ago
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Nintendo's Switch 2 could breathe new life into the video game giant—if Trump's trade war doesn't upend it all
To gamers around the world, April 2—'Liberation Day'—meant something else. In a slick prerecorded video presentation, Nintendo unveiled the Switch 2, the long-awaited successor of its wildly popular Nintendo Switch handheld console. It was exactly what gamers were hungry for: details on the console's more powerful specs; expanded access to Nintendo's decades-old back catalog; and new entries in the popular Mario Kart and Donkey Kong series. Even a surprise price hike—$450 versus the Switch's $300—didn't dent enthusiasm. A U.S. president could, though. A few hours later, Donald Trump announced his Liberation Day tariffs, including steep taxes on imports from China, Vietnam, Japan, and Cambodia—Nintendo's manufacturing hubs. It upended plans years in the making. The Switch 2's June 5 launch was poised to be a shot in the arm for Nintendo and the video game industry. Nintendo needs 'something new and exciting out in the marketplace that kicks that can down the road on the tech stuff for another decade, so they can continue to make the games they want to make,' explains Jeff Gerstmann, a journalist who has covered the industry for decades. Now Nintendo (like nearly every other company) is trying to keep up, even as Trump has since suspended most of the tariffs amid negotiations. Two days after Liberation Day, Nintendo paused U.S. preorders to assess the 'potential impact of tariffs.' It reopened them a few weeks later, maintaining the $450 price point and June 5 launch—but hiked prices on everything else, like controllers, 'amiibo' figurines, and other accessories. Like many other manufacturers, Nintendo (which didn't respond to Fortune's request for comment) is trying to figure out how to roll out a new product as the world's largest consumer market takes a protectionist turn. The Switch 2 is still likely to be a success, even if not quite as much as Nintendo hoped a month ago. But it will also be one of the first tests of how consumer tech companies will stay afloat in a world of tariffs, decoupling, and protectionism. If the video game industry has a champion, it's Nintendo. Founded in 1889 as a playing-card maker, it has developed the most well-known portfolio of intellectual property apart from Walt Disney, thanks to franchises like Super Mario, The Legend of Zelda, and Pokémon. But it's also one of Asia's most prominent consumer-tech companies, an Asian brand with true global reach. After struggling to stay relevant in the 2010s, Nintendo unveiled the Switch in 2017: an affordable handheld console that could connect to a television, but could also function without one. It was a wildly successful move. With 150-million-plus units sold as of March 2025, the Switch is the third-bestselling console of all time, behind Sony's PlayStation 2 and the Nintendo DS. COVID lockdowns made it a true household name, as consumers occupied themselves with video games. Nintendo, with its affordable console and a new game in the Animal Crossing series of cozy life simulators, was well-placed to capture that demand. Nintendo sold over 27 million consoles in 2020 alone. But eight years is an eternity in the video game world, and the console was showing its age. Nintendo reported slowing sales as gamers tired of a system that struggled to run the newest games, even those specifically designed for the console. Nintendo was also holding back marquee releases, so many people put their Switches in a drawer and forgot about them. This embedded content is not available in your region. Nintendo reported 1.2 trillion Japanese yen ($7.6 billion) in sales for its most recent fiscal year, which ended in March, a 30% drop from the previous fiscal year. Its ordinary profit saw an even bigger dip, dropping 45% year on year to reach 372 billion yen ($2.4 billion). And the company sold 11.5 million consoles in 2024, less than half of what it sold during the COVID boom years. Still, investors have shrugged off Nintendo's slowdown in anticipation of the Switch 2. Nintendo shares have been at record highs since December. Its market value is over $90 billion, making it Japan's eighth-most-valuable firm and placing it ahead of many Japanese companies on the Fortune Global 500. Nintendo was one of the first companies to shift manufacturing out of China to nearby Vietnam and Cambodia in 2019, after the first Trump administration threatened to impose tariffs on video game consoles made in China. 'The majority of their production is still done in China, but they've now switched to Vietnam to focus pretty much entirely on U.S. console production,' says Daniel Ahmad, an analyst with gaming-industry consultancy Niko Partners. That puts Nintendo 'ahead of the game' compared with competitors Sony and Microsoft. As the second Trump administration started up, Nintendo began front-running shipments to get ahead of possible future tariffs. JPMorgan estimated in early April that Nintendo had enough inventory to meet demand for six months to a year. The Switch 2's initial numbers likely won't take a hit, even with the price hike. Preorders in markets like the U.S. and Japan sold out instantly, and the company is already apologizing for future shortages. Nintendo is even selling a cheaper version that works only with games bought in Japan, likely to avoid resellers trying to bring it to markets like mainland China, where the company doesn't have an official presence. The real question will come after the initial launch, when holiday shoppers start thinking about buying the latest version. 'The big questions are around value—$450 is not a small amount of money,' Gerstmann says. The cost of games, too, is going up: Nintendo is targeting $70 to $80, as opposed to the $60 that has been traditional across the industry. The company is trying to scale back expectations, forecasting lower-than-expected Switch 2 sales of 15 million (still roughly in line with how the first Switch sold after its launch in 2017). In a May briefing to investors, Nintendo president Shuntaro Furukawa said the company was factoring in a profit hit worth 'several tens of billions of yen,' but noted the calculation was made on the basis of 145% tariffs on China and 10% tariffs on everyone else. (Trump soon after lowered tariffs on China to 30% for a 90-day period.) Furukawa noted the company's 'basic policy' was to pass on tariffs to customers—but admitted a price hike might not be the greatest idea for a just-debuted console. Nintendo isn't alone in thinking about how to manage increasing costs and new tariffs. Citing costlier development and 'market conditions,' Microsoft implemented a $100 price hike for the Xbox Series X and plans to start selling $80 games. Sony has avoided hiking PlayStation prices in the U.S., but raised prices elsewhere. The video game industry has been grappling with higher costs for years. Ahmad first points to the COVID supply-chain shock, which pushed up prices of components like memory. Game development is also getting more expensive as graphics become more advanced, boosting staffing and technology costs. That rebounds in the real world; Ahmad notes that Nintendo uses cartridges, rather than discs. 'If your game is 64 gigabytes and you get a 64-gigabyte cartridge, that's going to cost more to publish.' By making the first move to $80, Nintendo might have done the industry a favor. 'I'm sure other publishers and manufacturers are super happy that Nintendo took the blow for them,' Gerstmann says. He speculates that Nintendo's lower-end hardware, compared with Sony and Microsoft, might appeal to studios now trying to keep costs low: 'There's real potential for the Switch to change a lot of things about the way games are made.' The world may have avoided the worst of U.S. tariffs for now—they stand at 30% on China and 10% on everyone else as U.S. officials try to negotiate with major trading partners. At those levels, tariffs are tough but manageable for global business. But if negotiations break down—or if Trump lets his 90-day pause expire—then tariffs will shoot back up again: 54% on China, 46% on Vietnam, and 49% on Cambodia, giving Nintendo a lot to contend with. Their struggles are indicative of a broader tension in Trump's tariff regime: Vietnam and Cambodia are two popular 'China plus one' destinations, countries where manufacturers based final assembly so as to avoid tariffs on China-made products. Trump officials are reportedly pressuring trading partners to limit trade with China in order to isolate Beijing. But a surge in exports by Vietnam, Cambodia, and others will hurt Trump's other goal: balancing U.S. trade with the rest of the world. Nintendo's customers are used to facing uncertain and hazardous environments in the company's games. The question now: Can Nintendo, and other Asian manufacturers, show that same skill in navigating a more geopolitically fraught world? This article appears in the June/July 2025: Asia issue of Fortune with the headline 'Game on!' 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