Nintendo loses $6.4 billion in value after it says Pokemon Go will have a limited effect on earnings

Nintendo loses $6.4 billion in value after it says Pokemon Go will have a limited effect on earnings
The value of video game maker Nintendo, which had risen $17.6 billion since the release of Pokemon Go, gave back $6.7 billion in valuation on Monday. The 18% decline was brought on by a number of factors, including the quick doubling of the stock over the last couple of weeks. But the main catalyst for the drop was a comment made by the company on Friday stating that the game would have a limited financial impact on the company. Nintendo said that even with the wild success of the game, there was no reason to revise its annual earnings forecast upward.

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.

source: Bloomberg

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11 Comments

1. trojan_horse

Posts: 5868; Member since: May 06, 2016

Wow, Pokemon Go , a game with an early success, brings no significant revenues! Now where are those users who were praising this game, by daring to say it's on par with PlayStation blockbusters like Call of Duty and GTA V !? lulz

3. MrElectrifyer

Posts: 3960; Member since: Oct 21, 2014

"brings no significant revenues TO NINTENDO!" FTFY. Niantec is definitely making significant revenue from this app, given all the news and widespread adoption...

8. trojan_horse

Posts: 5868; Member since: May 06, 2016

@MrElectrifyer, you read my comment, didn't you? So it was about NITENDO, not NIANTIC. Because I know Niantic's case is different, and rightfuly so.

9. Jason2k13

Posts: 1460; Member since: Mar 28, 2013

You never mentioned who it benefited to, learn to write maybe? Because according to your first comment it never brought any significant revenue even though it did?

4. RebelwithoutaClue unregistered

30% goes to Apple/Google, 30% goes to Niantec, 30% goes to Pokemon trading company. Only 10% goes to Nintendo. So there are significant revenues, just not for Nintendo.

5. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Well nintendo benefits from the value of their holding increasing and the publicity and halo effect for the Pokemon franchise. So there are many benefits for Nintendo because of this if not monetary.

7. trojan_horse

Posts: 5868; Member since: May 06, 2016

@RebelwithoutaClue I know that other respective stake holders and partners get their cut. Niantic benefited well. But my first comment was about Nitendo's revenues only, not Niantic's. And yes, Nitendo benefits in a better way: it's holdings gets an increase in value, and that's even more significant than it's actual share of Pokemon Go's revenue.

2. tonyv13

Posts: 113; Member since: Jun 07, 2015

Well Nintendo the success of pokemon go should tell you to start making more mobile games. I wouldn't mind paying 20 to 30$ on a fire emblem for my mobile as long is well made.

6. trojan_horse

Posts: 5868; Member since: May 06, 2016

Well made? The $30 price tag of PlayStation games isn't only because of how it's "well made", but also because of the huge amount of work in developing, with millions of lines of codes, compared to the few thousands in mobile games. There's no way to justify a $30 price tag of a mobile game! No way. Mobile games are nowhere near as complex as PC games.

10. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

You hit the nail right on the head. Just like some who compare PC gaming benchmarks to mobile. The fact PC games have millions of lines of code and cost as much as 100x's+ the cost of a mobile game, shows they shouldn't be compared.

11. elitewolverine

Posts: 5192; Member since: Oct 28, 2013

The games could be on par with pc games...but they are not. They are made with quick tools to pump out as many different games with the same play but different art assets. If I had the time and better skills I would recode MechCommander 2 into a UWA. The full source code was released by MS a long time ago to fub with. Considering the phones are now as powerful as pcs that ran it long ago, it would just be a coding challenge. Bring me a game like MC2 and I would pay 19-40 for this type of game on mobile. If I knew I would be getting my moneys worth. Kind of like 3ds games, 30+ for something like Monster Hunter etc...

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