Nintendo shares have taken a deep dive after the company warned the Pokemon Go mania would only have a limited impact on net profits. Investors had been hoping for a big leap forward in the months ahead.
Nintendo shares plunged Monday after the Japanese company warned that the Pokemon Go mania sweeping the world would not translate into bumper profits.
The stock dived a staggering 17.7 percent in response to a forecast that the popular smartphone game would have only a limited impact on the video game firm’s bottom line.
Prior to the warning, markets had cheered the app’s global success as a great sign for Nintendo’s long-awaited move into the mobile games market. The stock had soared as investors bought the narrative, pushing capitalization and making the firm more valuable than Sony.
Exaggerated expectations
But analysts warned that the rally was overdone. While Nintendo is the creator of the Pokemon franchise, the game itself (released on July 5) was developed and distributed by US-based Niantic, a Google spinoff.
Nintendo has invested in Niantic and own about a third of the Pokemon Company, which will get licensing fees for loaning out the brand.
Downloading the app is free, so Nintendo and others are banking on consumers using paid-for services in the game itself.
Since its launch, Pokemon Go has sparked a worldwide frenzy among users, who have taken to the streets with their smartphones. The app uses satellite locations, graphics and camera capabilities to overlay cartoon monsters on real-world settings, challenging players to capture and train them for battles.
hg/sri (AFP, Reuters)
