Pokémon Go: Nintendo shares nosedive after investors realise they didn't create the app
Nintendo shares drop after they clarify their stake in Pokémon Go.
Following the initial launch of Pokémon Go, Nintendo shares went through the roof, which was great news for them considering they're not actually involved with the app.
But it seems like this is news to their investors.
Nintendo will be reporting their first-quarter results this week and perhaps in an effort to temper expectations, they issued a press release that said the financial impact of Pokémon Go will be “limited” and that they wouldn't be revising their annual profit forecast, having already taken into account income from the app and potential sales of the Pokémon Go Plus peripheral.
In the statement they point out that “ is developed and distributed by Niantic The Pokemon Company holds the ownership rights to Pokemon. The Pokémon Company is going to receive a licensing fee as well as compensation for collaboration in the development and operations of the application.
“ owns 32% of the voting power of The Pokémon Company.”
The statement seems to have panicked some investors, as shares plunged by by around 18% in the wake of its release – the most share prices are allowed to move in a single day on the Tokyo stock exchange, and the biggest drop for the company since 1990.
“The market has overreacted to the Nintendo statement,” David Gibson, a senior analyst at Macquarie Securities Group, told Reuters.
“I believe that Pokemon GO will be material in the company's earnings given the current trends for the game.”
The app had 10 million downloads in one day after its Japanese release and topped the U.S. iOS charts, but according to Reuters, “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.”
Regardless, they're still better off then they were before the launch of the app, with shares doubling in value after its release at the beginning of July.
