Shares in Nintendo plummeted the daily limit of 18 percent on Monday after the legendary gaming company told investors that Pokemon Go will have only a “limited” effect on its bottom line.
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“The Company owns 32 per cent of the voting power of The Pokémon Company”.
Nintendo’s share price has nosedived almost 18 per cent as a result – Tokyo stock exchange rules prevent any single day falls beyond 18 per cent.
Pokemon Go was seen as a shot in the arm to Nintendo – which also created the Donkey Kong, Super Mario and Legend of Zelda brands – after it abandoned a longstanding consoles only policy and opened the door to licensing some of its characters for mobile game use.
“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.
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The phenomenal success of Pokémon GO has triggered massive buying in Nintendo shares and even with Monday’s decline, the shares are still up some 60% compared with levels prior to the game’s July 6 launch in the United States, Australia and New Zealand. The Japanese firm’s affiliate, Pokemon Company, is on track to receive licensing fees for the game. Its disclosure around how little it stands to profit from this has meant this has taken a hit, though Nintendo still stands in much better shape than before the game hit the app stores. The company had been reluctant to license its popular characters for games on other devices and was slow to catch the smartphone wave. The company said it had already factored sales of Pokemon GO Plus into its previous earnings forecast. The forecast is for a 35 billion yen profit, a significant increase from the 16.5 billion yen earns the same quarter of the previous year. But that three month period ended before the launch of Pokemon Go.
