Shares of Nintendo Co tumbled as much as 18% early on July 25 after the company said smash-hit mobile game Pokémon GO would have only a limited impact on its earnings.
Advertisement
With the smashing success of Pokemon Go, one would think Nintendo must be happier than a Jigglypuff.
“They also explain, in the statement that “[Pokémon Go] is developed and distributed by Niantic [and] The Pokemon Company [which] holds the ownership rights to Pokemon.
It’s hard to determine exactly what direction Niantic is heading in with the game, largely because Pokemon GO has only been available for a matter of weeks. This 32% stake implies a smaller profit than what some investors might have expected because of the rising popularity of the game.
The final piece in the “Pokemon GO” puzzle fell into place last August, when Google reorganized itself as a holding company called Alphabet that would in turn own a collection of independent subsidiaries – from large ones such as Google itself to tiny ones such as Niantic. It was particularly resistant to the idea of developing or licensing video games for smartphones.
Investors had hoped these sources would add up to a big financial boost for Nintendo.
The drop partially offset Nintendo’s recent, extraordinary climb, when its shares and market capitalisation doubled after Pokemon Go’s release on July 6.
Nintendo shares were down 17.6 per cent in mid-morning trade, a slide of 4,965 yen – just shy of the daily limit of 5,000 yen for the stock.
The sharp losses posted Monday reflect the new guidance from Nintendo. The company said it had already factored sales of Pokemon GO Plus into its previous earnings forecast.
If the Pokemon Go craze has staying power, Nintendo might be able to cash in on the purchase of add-on features for the game.
Advertisement
“Even if Pokemon Go does not directly contribute to Nintendo’s earnings, it owns other characters like Super Mario and Zelda”.
