Pokémon goes bad for Nintendo as shares plunge

Nintendo shares plunged by the most since 1990 after the company said the financial benefits from the worldwide hit Pokémon Go will be limited.

The stock sank 18% to 23,220 yen (€199.50) at the close in Tokyo, the maximum one-day move allowed by the exchange, wiping out 708bn yen in market value.

After debuting in the US earlier this month, Pokémon Go launched in Japan on Friday and became available in Hong Kong yesterday.

The correction comes after Pokémon Go’s release almost doubled Nintendo’s stock through Friday’s close, adding €16bn in market capitalisation.

Nintendo is a shareholder in the game’s developer Niantic and Pokémon Co, but has an “effective economic stake” of just 13% in the app, according to an estimate by Macquarie Securities analyst David Gibson.

“It’s still possible to say that in the short-term it’s overheated,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities.

In a press release after the market closed on Friday in Japan, the Kyoto-based company said the game’s financial impact will be “limited” and that it is not necessary to revise its annual forecast even after factoring in current conditions.

It also said revenue from Pokémon Go Plus, a Nintendo-produced accessory for the game expected to go on sale soon, has already been factored into the current guidance.

“The content of the announcement itself is not that shocking, but it is a surprise they said it on Friday instead of when they report earnings” later this week, said Nobuyuki Fujimoto, a senior market analyst at SBI Securities.

“The game has been published in Japan, so for the time being we’ve exhausted all the catalysts.”

The company will report first-quarter earnings tomorrow, a period that ended before the release of Pokémon Go.

The firm is forecasting an annual net profit of 35bn yen in the current fiscal year, up from the 16.5bn yen it earned last year.

Shares of related companies also fell. McDonald’s Holdings (Japan), the game’s exclusive launch partner, declined 12%.

Electronic parts maker Hosiden Corp, which Mitsubishi UFJ Financial Group said may produce Pokémon Go Plus, sank 16%.