Screenshot: Nintendo (Super Mario Odyssey)

Earlier today, Nintendo’s quarterly earnings report showed mixed signals; operating profits were up, but Switch sales and software attach rates were down. That all must have meant something to the Wall Street investor who gambled hundreds of millions on the assumption that the video game giant is about to hit a major snag in the road.

Yesterday, Bloomberg reported that Gabriel Plotkin, the head of a New York hedge fund called Melvin Capital Management, had made a $400 million bet that Nintendo’s future doesn’t look too bright. This technique is called “shorting,” and it refers to someone borrowing stock and selling it at the existing market price under the assumption that, weeks or months down the road, the stock will have fallen and then can be bought back at a much lower cost.

Nintendo’s stock has been in a rough place ever since E3, dropping 16% between the start of June and the end of the show two weeks later. Traders apparently weren’t impressed by the the fact that Fortnite had arrived on Switch and the new Super Smash Bros. would include every character in the series’ history. But a slump in share prices is far from the $400 million gamble Plotkin’s made. What does he know that we don’t, huh?

Screenshot: Nintendo (Mii Plaza Stock Exchange )

Plotkin declined to explain his theory on why he expects Nintendo to stumble in the near future, but we at Kotaku are longtime observers of the company through all its wondrous and head-scratching phases, so we have some ideas of our own:

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  1. Plotkin is dismayed by the news that Nintendo won’t be trying to rehash its back catalog via the virtual console on yet another of its devices, and he sees softer digital sales on the horizon if fans can’t buy Super Mario Bros. 3 for $5 one more time.
  2. He’s pissed that Mario Tennis Aces’ story mode was so half-assed and sees it as a sign Nintendo is already taking its fans for granted again.
  3. Despite the company adding loot boxes to Animal Crossing: Pocket Camp, Plotkin doesn’t think Nintendo’s been aggressive enough with its monetization efforts on mobile after Super Mario Run’s lackluster performance.
  4. Yoshi was MIA at E3, and we didn’t hear a peep about Metroid Prime 4 either. An overall lackluster line-up going into the end of the year means the average sale of .9 games per Switch owner for this past quarter (compared to 1.7 a year ago) could drop even further.
  5. Having watched his niece struggle to put together Nintendo Labo cardboard in any configuration even vaguely resembling a house, Plotkin had a premonition that sales of the kits would drop off fast, stagnating at around 1.39 million three months after release.
  6. Plotkin is incredibly skeptical that the company that brought us friend codes won’t somehow fuck up the new online subscription service launching in Q3.
  7. Summer’s half way over and Nintendo still hasn’t announced an N64 Classic.
  8. Plotkin heard that this year’s Pokemon games, Let’s Go Eevee and Pikachu, were spin-offs and not “core” games in the series, and he doesn’t think giving Pikachu a bowl cut will be enough to make up the difference in sales potential.
  9. The hedge fund manager thinks Nintendo is overhyped right now and that double digit stock growth quarter after quarter (from $15 to $50 in just two years) has left the company overvalued and ripe for a bubble-bursting reality check. The Legend of Zelda: Breath of the Wild and Super Mario Odyssey only get to come out once, after all.
  10. Yes, Ridley’s in Smash now. But no Waluigi? Huge mistake. You get what you get for that one, Nintendo.