Nintendo shares plunged Monday after it warned that the Pokemon Go mania sweeping the world would not translate into bumper profits, popping a dizzying rally that more than doubled the Japanese firm’s market value.
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Nintendo shares were down 17.6 percent in mid-morning trade, a slide of 4,965 yen – just shy of the daily limit of 5,000 yen for the stock. Nintendo owns 32 percent of The Pokemon Company and is reported to hold a similarly sized stake in Niantic, the US lab that developed the Pokemon Go game.
Nintendo says the earnings from Pokémon Go were already factored in when it released its annual forecasts in April.
“The market has overreacted to the Nintendo statement”, said David Gibson, a senior analyst at Macquarie Securities Group, noting the game in Japan had broken records with 10 million downloads in one day.
Investors reacted to a company announcement on Friday night saying that the game’s contribution to consolidated earnings would likely be limited, despite it being a huge hit in Japan and overseas.
Nintendo, based in Kyoto, reports its financial results for the first quarter on Wednesday. Pokemon Go’s conversion rates, which track dollars per user or how many users buy items, aren’t yet publicly available, and may never be made so. This is because the company’s share prices have been on the rise and it does not appear to be slowing down. Fans have been eagerly awaiting its release since it first came out more than two weeks ago in Australia, New Zealand and the United States, and then spread to become a blockbuster hit in more than 20 countries.
Nintendo shares had soared until the end of last week’s trading, with investors expecting the game to bring a significant boost to the company’s earnings.
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Amidst all the problems that the Pokemon go has been facing in terms of people falling off Cliffs and driving into other cars while playing the game, the Pokemon go is still Armor Singh popularity on its way around the world.
