Nintendo stocks tumble as investors work out it doesn’t make Pokémon Go

Just a week ago, we reported that Nintendo shares had skyrocketed following the release of Pokémon Go. Today, we can report that they’ve plummeted right back down to where they used to be, as investors slowly realise Nintendo doesn’t actually have much to do with the game.

Team Valor (Candela), Team Mystic (Blanche), Team Instinct (Spark)

Team Valor (Candela), Team Mystic (Blanche), Team Instinct (Spark)

It’s all in the numbers. Nintendo owns 32% of The Pokémon Company, one of the companies that has collaborated to create the worldwide gotta-catch-em-all smartphone phenomenon. The other is Niantic Labs, who created Ingress (a similar AR game) a few years ago as part of Google. Even if The Pokémon Company and Niantic are equal partners, that means Nintendo’s bottom line impact will be “limited” – and the console manufacturer said as much in a statement put out after close of trading on Friday.

The statement also explained that revenue from Pokémon Go and its (as-yet unreleased) Pokémon Go Plus smartwatch peripheral has already been accounted for in the company’s financial forecasts – it seems that at least one company predicted that the game would go gangbusters.

…and, as quickly as things went up, they came back down again: Nintendo stocks dropped 17% at one point in Monday trading – that’s around US$6.4 billion, for those playing at home. Things could have been worse, but the Tokyo stock exchange has rules in place to prevent share prices moving more than 18% in a single day.

The thing is – Nintendo wasn’t reporting anything new. When the game was announced, it was announced as a Niantic / Pokémon Company project. There’s nothing actually Nintendo about Pokémon Go – and that’s something countless investors are realising this week.

That said, Nintendo is working on its own mobile games in partnership with DeNA, with titles inspired by both Animal Crossing and Fire Emblem in the works. These aren’t anticipated to be anything like Pokémon Go in popularity, but they should do pretty well for themselves (and the company).

The lesson here: Always read the fine print, particularly before investing in a company suffering a 12-month slump.

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