Is It "Game Over" for NVIDIA Stock?

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

The graphics chip giant was set to roll out its state-of-the-art portable gaming console this morning. NVIDIA 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 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 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 (NASDAQOTH: NTDOY  ) and Sony (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'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 and Sony 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 and Sony can rest easy. The NVIDIA 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.

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Read/Post Comments (16) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 27, 2013, at 7:18 PM, jwtrotter wrote:

    This article is incredibly premature and overdone. Did the writer bother to compare the other companies behavior the last few days? AMD went down further than Nvidia today for example in percentage and Qualcomm has also been dropping over the last few days despite the overall market's rise. To say something like 'one has to wonder if NVIDIA will be able to bounce back from this', simply implies the predisposition of the writer, not the real effects of the delay. Nvidia is fine, I think the 'damage' is muted at worst and actually may help garner more positive attention because of the quality Nvidia expects for the Shield. There are several articles out about the performance for those getting a first look and hands on experience ahead of the launch as well as comments reinforcing Nvidia's success with Ouya and other recent wins that imply momentum is building for the company. I wonder if this writer has even bothered reading the reviews already out for Shield?

  • Report this Comment On June 27, 2013, at 8:42 PM, cdkeli wrote:

    This article makes a mountain out of a mole-hill,,,the comments by "jwtrotter" are certainly on the mark. I can only speculate the author of this "chicken little" article must have stock in a competitor,,,what lousy, self-serving, excuse for journalism,,,

  • Report this Comment On June 27, 2013, at 8:50 PM, anonimus234 wrote:

    I think this writers opinion is a little weird. I hope he's not betting against nvidia cause he's gonna lose his shirt. One of the reasons I invested in nvidia is that they always seem to have great products at good prices. They know customers expect something thats high end and lasts. to release anything else would be disastrous to there flawless reputation. The thing about the price drop if they would have done it a week after the release they wold have pissed off everyone that bought one at 350. Doing this before the release won't anger any of there customers. Thea days a company's reputation counts as mush as the quality of their products. Especially when it's a new product. Nvidia has really good PR department. That's why Microsoft, a com

  • Report this Comment On June 27, 2013, at 8:52 PM, anonimus234 wrote:

    That's why Microsoft, a company known for price gouging, needs a company like Nokia, known for dependability, to try to sell their windows phones.

  • Report this Comment On June 27, 2013, at 9:23 PM, SRNoyes wrote:

    Nvidia is a standard over promise and under deliver company and this has never been more true than on their Tegra line of embedded chips. The Tegra 1 was 18 months late. The Tegra 2 was 6-9 months late and lacked the NEON engine as well as having lack-luster graphics. Tegra 3 was OK but its extra power saving core did not keep it from drinking battery like no tomarrow.

  • Report this Comment On June 27, 2013, at 9:31 PM, Rickman2k wrote:

    "Perhaps more importantly for NVIDIA, it could've turned the company's well-respected brand into a household name." ??? I thought it already was

  • Report this Comment On June 28, 2013, at 2:48 AM, dthoward11 wrote:

    Another DOOMS DAY article. Surprise surprise. How about something original? As long as there are graphic rich video games to be played on computer platforms, NVIDIA will remain.

  • Report this Comment On June 28, 2013, at 10:27 AM, JD80 wrote:

    Oh noes, a one month delay! This will definitely cause Nvidia's certain death.

  • Report this Comment On June 28, 2013, at 11:40 AM, znajit wrote:

    Turning chip company to a systems solution is not easy – EE’s mind set is not the same and NV would have been better off, to show Tegra Vol sales after years of struggling with it, should have funded a company on the side line than to jump in both feet

    NV needs to re-invent but not by launching a gaming platform to sell Tegra ...doing this 5 years back would have been a different story

  • Report this Comment On June 28, 2013, at 1:48 PM, djangojazz wrote:

    Honestly does anyone that writes for technology know technology at all? They seem to just make it up as they go. This is no more apparent than where gaming is concerned as these writers strike me as people that no nothing about the market historically, no NOTHING about technology, and then write these very 'matter of fact' things on how the industry is dying or lessening and things for portable are taking over. Honestly if you have a home PC or laptop you have either ATI or NVIDIA technology in your GPU.

    While both AMD and NVIIDIA seem to have gone down lately the writers seem to not know a basic concept of IT. Developers go through a life cycle of testing before release and releasing something with bugs is far more costly than releasing something right. You can ask Apple about that with IO6 if you want and see who kept their jobs that was in charge of their 'maps' division. Honestly NVIDIA has ALWAYS had a love hate with people, but so does ATI.

    I think more of these writers talking about the take over of Mobile, or Ouya, or the failure of something yet to happen shoudl at least have a little perspective on the market as a whole. Even if the PC gaming market slumped the writer should note that most sources are actually showing it is growing and thus ATI and NVIDIA over the long term stand to benefit from products like PC gaming despite this.

  • Report this Comment On June 28, 2013, at 3:08 PM, CrookByDaBook4 wrote:

    I love the products from Nvidia, I plan on buying a second card soon for my pc.

  • Report this Comment On June 28, 2013, at 3:51 PM, Tantric989 wrote:

    It may be important to mention that the writer owns stock in an NVIDIA competitor, QUALCOMM.

    I like my doomsday stock news with a bit of conflict of interest on the side.

  • Report this Comment On June 28, 2013, at 7:58 PM, ToneStark wrote:

    I think it is important to note that the SHIELD is able to stream PC games over the internet via steam. That is its major draw IMO, not android games. Who would pay $300 to play android games? Most everyone owns a smartphone these days.

  • Report this Comment On June 28, 2013, at 8:05 PM, Bunnyking77 wrote:

    It's way too early to be writing articles like this and expect people to take you serious. I'm sure Nvidia will be fine.

    I don't understand how Motley Fool lets people post stuff like this.

  • Report this Comment On June 28, 2013, at 10:03 PM, Zbow wrote:

    I have owned several Nvidia GeForce cards over the years and have been VERY happy with their performance.

    Would recommend them to anyone!

    That being said...

    I can't wait for Shield! The fact it works with Steam's Big Picture to stream you games Via their GRID servers or your own GTX card is exactly what I want as a PC gamer. I have a large heavy rig and id much rather have a handheld over a laptop as a tag along. That is why I WILL be buying this product.

  • Report this Comment On June 28, 2013, at 10:09 PM, Zbow wrote:

    Also, them holding off on the product instead of releasing something slightly defective show to me they care that this thing is absolutely perfect. A better policy that prevents Blu-ray and RROD problems.

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