Nintendo Co. posted its worst drop in 26 years Monday after the company poured cold water on the notion that the explosive popularity of Pokemon Go would translate into steady profits.
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The stock went down to 18 percent at the close in Tokyo, which is the maximum one-day move allowed by the exchange.
SBI Securities senior market analyst Nobuyuki Fujimoto said it was surprising the company made the announcement on Friday instead of during its earnings report this week.
Nintendo is expeting a 37 percent increase in operating profit to bring the total up to 45 billion yen ($425 million) in the year until March 2017.
“This mobile game application is developed and distributed by Niantic, The Pokémon Company, which is an affiliated company of Nintendo, holds the ownership rights to Pokémon”. They also pointed out the company income reflected on its results are “limited”.
Nintendo went through the roof since everyone assumed the company had created the game. This comes on the heels of last week’s dismal performance, which saw shares fall by more than 13%.
Nintendo said, however, that sales of the device have already been factored into its earnings outlook.
“Taking the current situation into consideration, the company is not modifying the consolidated financial forecast for now”. In other words, Pokemon Go may have driven the stock, but a lot of that gain has been recovering lost ground over the past year.
That said, Comic-Con’s decision to upgrade the Pokemon Go panel to Hall H was warranted – the room was packed with fans who speckled the darkened room with light from their cellphone screens as they played the mobile game throughout the presentation. Even with Mewtwo as allegedly the most powerful Pokemon, Mewtwo is still not helping Nintendo in making money. Japan, the game’s exclusive partner, declining to around 12 percent.
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But some market players said Nintendo was being disingenuous, adding that there were few expectations of upward revisions to its profit targets so early after the game’s launch and that it was clear the game would be key to earnings.
