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Nintendo shares closed 7% higher in Japan on Friday after it revealed sales of "Pokémon Pokopia" surpassed 5 million units on its flagship Switch 2 console.

The milestone was hit just over four months after it launched on March 5, Nintendo said on Thursday. This would make it the second-best-selling game on the Switch 2, ahead of "Donkey Kong Bananza" and behind "Mario Kart World."

First announced in September last year, the game wasn't seen as a huge blockbuster, given it is a spin-off from the main Pokémon franchise. Its gameplay has elements of "Animal Crossing," one of Nintendo's most popular games on the original Switch.

Investors watch updates of game sales closely because hit titles can often drive shipments of Nintendo's console, which has faced some headwinds.

Rising memory prices forced the company to raise prices of the Switch 2, which went on sale just over a year ago.

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In the June quarter, Nintendo sold 3.82 million Switch 2 consoles, down 34.4% year-on-year. The company forecast sales of 16.5 million Switch 2 consoles in its fiscal year ended Mar. 31, 2027, which would also be lower than the same period the previous year.

Nintendo on Thursday also announced expansion packs and updates to "Pokémon Pokopia" as it looks to bring new gamers to the title and keep current players engaged.

Shares of Nintendo are still down more than 16% this year. But, over the last month, the stock has rallied more than 26% as investors bet on an improving outlook and hope upcoming blockbuster games spur console sales.

Nintendo plans to launch "The Legend of Zelda: Ocarina of Time," a remake of the classic first released on the Nintendo 64 in the last 1990s, on the Switch 2.

Two new Pokémon games are also slated for next year. Pokémon and Zelda are among of Nintendo's two most popular franchises.

Nintendo has reported a jump in profits, as the Japanese game maker’s earnings were buoyed up by a long-awaited refund on Donald Trump’s tariffs.

The company said profits surged 53.5% to ¥147.4bn (£694m) over the three months to June, substantially beating expert forecasts for ¥77.8bn.

Nintendo said sales of its Switch 2 console, which was released last summer, “maintained strong sales momentum”, while popular games such as Yoshi and the Mysterious Book, Star Fox, and Pokémon Pokopia “performed steadily”. However, that did not make up for an overall drop in sales compared with the same period last year, with revenue down by 10% to ¥517.8bn.

Instead, Nintendo said profits were aided by a refund on US tariffs, after the country’s supreme court ruled in February that Donald Trump’s sweeping “liberation day” trade levies were illegal.

The Trump administration has refunded about $100bn from the tariffs charged before the court ruling, representing 60% of the total $165bn collected. Trump has continued to pitch tariffs as a solution for the US economy, bringing back domestic production, securing better trade deals and closing the deficit in the federal budget.

Nintendo’s Tokyo-listed shares were up 2.87% on Thursday after the earnings release.

The company filed a lawsuit weeks after the US supreme court ruling, demanding a full refund from the White House that would cover what it spent on tariffs, plus interest.

While a refund now appears to have come through, Nintendo stopped short of confirming the full amount, at a time when it is still appears to be resisting calls to pass those refunds on to consumers.

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Last month, Nintendo was hit with a class action lawsuit on behalf of customers, which claims the company hiked its prices because of tariffs but later benefited from the refunds. Nintendo’s lawyers described the lawsuit as “meritless”, and that the price customers paid represented “the purchase price of the goods they wanted and received.”

Last month, Trump imposed a fresh round of tariffs on more than 80 countries, including Japan, in a move that is likely to pose further problems for companies such as Nintendo. However, a coalition of 25 US states are now suing the Trump administration over the levies, potentially opening the door to another round of refunds for beleaguered exporters.

ToplineNintendo argued consumers “received exactly what they bargained and paid for” after raising the price for its Switch 2 console, asking a court to dismiss a class-action lawsuit claiming the video game giant should issue tariff rebates, as only a handful of companies have said they would issue refunds.

The video game giant previously blamed “market conditions” for price hikes.

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Key FactsNintendo, in a motion filed late Monday, argued consumers who sued the firm to receive tariff refunds are “not entitled” to a rebate and claimed the money they paid for Nintendo products “represents the purchase price of the goods they wanted and received.”

Consumers filed a class-action lawsuit against Nintendo in April, claiming the company—which sued the Trump administration to recoup tariff payments—raised its prices because of the tariffs and would later receive refunds for those levies, effectively allowing the company to collect the costs twice.

Nintendo’s attorneys criticized the lawsuit’s argument as “meritless,” arguing consumers failed to dispute Nintendo’s price adjustments as unlawful or that the company misled customers.

In its motion, Nintendo said it made the “difficult decision” to raise prices for some of its products “in response to market conditions,” which the firm said included tariffs as well as the cost of memory, labor and shipping.

Shares of Nintendo dropped 4% in Tokyo-based trading on Tuesday.

crucial quote“Nintendo or one of its retailers set a price for each product, and consumers decided whether that price was worth paying,” Nintendo’s attorneys wrote. “Those who bought Nintendo’s products received exactly what they bargained and paid for: a console, game and/or accessory at a price to which both parties agreed.”

what companies will issue tariff refunds?Only a few have publicly stated they would pass on tariff refunds to consumers: Costco CEO Ron Vachris said in March the company would turn tariff refunds into “lower prices and better values.” FedEx said it would issue refunds to shippers and consumers who originally paid the tariff charges. UPS similarly said it would reimburse customers for tariff-related charges.

tangentFord, which has said it would not pass on tariff refunds, faces a proposed class-action lawsuit in Michigan from consumers who claim they should receive reimbursement. Ford previously said it expected a one-time $1.3 billion refund.

key backgroundNintendo announced a price hike for its then-upcoming Switch 2 console one day after President Donald Trump announced sweeping tariffs against more than 180 countries last year. The video game firm launched global price hikes again earlier this year, citing “market conditions,” following similar moves by Sony and Microsoft amid a broader chip supply crunch. The Trump administration has said it would refund $166 billion to some 300,000 different importers after the Supreme Court ruled Trump’s levies were unlawful, leading the way for many firms, like Nintendo, to sue for reimbursement. Some economists have warned that tariff rebates would only benefit U.S. importers. Among those making that argument is UBS chief economist Paul Donovan, who wrote earlier this year it “seems unlikely anyone will rush to lower prices to their consumers.”

further readingForbesNintendo’s Switch 2 Gets A $50 Price Hike—Company Blames ‘Market Conditions’By Siladitya RayForbesNintendo Surprises With Switch 2 Price Hike—As Trump Imposes Tariffs On China And VietnamBy Conor Murray

ForbesTariff Refunds Start Today—But Average Consumers Won’t BenefitBy Ty Roush