Nintendo loses $6.4 billion in value after it says Pokemon Go will have a limited effect on earnings
Nearly two weeks ago, we said that investors were jumping the gun by purchasing Nintendo stock. Not only is the game free, but Nintendo only gets slightly more than a 10% cut of in-app revenue. Those who came to the same conclusion we did and shorted the stock, made an estimated $140 million from today's drop in value. Selling short is basically the reverse of buying low and selling high. Sellers borrow the shares and sell them, profiting if the stock declines.
The company will report fiscal first quarter results Wednesday. But that three month period ended before the launch of Pokemon Go. Still, the company could announce estimates for its fiscal second quarter earnings which would include results from the AR game. We also could hear more about the next mobile game coming from the company.