Nintendo’s Stock Plunges After Pokemon Go Announcement

Nintendo's Stock Plunges

After Nintendo reminded investors that they would only be making a limited amount of money from the hit mobile game Pokemon Go, their stock plummeted. In fact, their shares took their biggest drop since 1990.

When the market closed in Tokyo on Monday, the stock had sank by 18%. The total loss was 708 billion in Japanese yen. Pokemon Go made its American debut at the start of July. On Friday, July 22nd, the game finally was released in Japan. It arrived in Hong Kong on July 25th.Nintendo's Stock Plunges After Pokemon Go Announcement

When Pokemon Go was initially released, Nintendo’s stock had almost doubled. However, many people were under the mistaken impression that Nintendo was the sole owner of Pokemon Go. In reality, Nintendo only has a 13% stake in the popular app.

Analyst Tomokaki Saki said that the reaction to the game was “overheated.”

In the press release issued by Nintendo, investors were cautioned that the app would only have a limited impact on Nintendo’s financials. In fact, Nintendo declined to make any revisions to their annual forecast. Nintendo has also taken potential revenue from Pokemon Go Plus, the accessory that is being released for the game, into the equation.

While market analysts have acknowledged that the statement itself isn’t particularly unusual, many found the timing of it to be strange. “It is a surprise they said it on Friday,” claimed Nobuyuki Fujimoto, who works as a market analyst for SBI Securities Co. Most analysts expected that Nintendo would make the announcement when they had something else to buffer the news. If they had handled things in a different way, their stock may not have plunged so heavily.

On Wednesday, when the market closes, Nintendo will report their first-quarter earnings. This period concluded before Pokemon Go was released. It is expected that Nintendo’s profits will be at 35 billion JPY, well above the 16.5 billion it reported last year. While Nintendo may be making less than expected from Pokemon Go, the company is in a strong position.

While interest in Nintendo surged at the start of the month, it seems that the stock went too far. It was clear that the stock would fall eventually. It was simply not expected that the stock would fall so dramatically. In fact, companies that were related to Nintendo also plunged. McDonald’s Holdings Co., who partnered with Nintendo to launch the game, took a 12% drop Hosiden Corp., the company rumored to be producing the Pokemon Go Plus accessory, dropped 16%. Many of the people that made investments because of Pokemon Go have begun to sell off their stock.

In addition to the earnings announcement that is coming from Nintendo on Wednesday, investors are waiting to see if Pokemon Go will be launching in China. While this is a massive market, government restrictions may make it impossible to release the game. In addition, investors are eagerly awaiting updates on other mobile games from Nintendo. They are also curious about the announcement of their next generation console, which is scheduled to be released in 2017. While Nintendo’s stock has taken a dramatic drop, it seems very likely that the stock will rise again in time.

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