Shares of Japan’s Nintendo has soared again, more than doubling the firm’s market capitalisation to 4.5 trillion yen (€38.5bn) in just seven sessions since the mobile game Pokémon Go was launched in the US.
The phenomenal success of Pokémon GO — now available in 35 countries, the majority in Europe, and most recently in Canada — has triggered massive buying in Nintendo shares, surprising even some seasoned market players.
“I’ve never seen the trend of such a big company’s shares changing so quickly in such a short period of time,” said Takashi Oba, senior strategist at Okasan Securities.
Nintendo shares ended a session yesterday up 14.4%, bringing its gains to more than 100% since the launch of the game on July 6.
Turnover in Nintendo shares hit 703.6bn yen, surpassing the record for trading turnover in individual shares it set on Friday, of 476bn yen.
Trading in Nintendo shares roughly accounted for a quarter of the entire trading on the Tokyo Stock Exchange’s main board.
The success of Pokémon GO, unforeseen even by its creators, has boosted hopes that Nintendo could capitalise on a line-up of popular characters ranging from Zelda to Super Mario to strengthen its new foray into augmented reality.
“Virtual reality and augmented reality have been a focus of the market but hardly anyone was expecting Nintendo in this area. Suddenly Nintendo has become an AR-related stock,” said a fund manager at a Japanese asset management firm, who declined to be named as he is not allowed to discuss individual shares.
The fund manager said the big gains were justifiable considering the likely boost to Nintendo’s bottom line.
“Under my rough estimate, the sales from Pokémon GO and upcoming related gadgets will boost net profits by 50bn yen. Based on that assumption, Nintendo is traded at 30 times profits, which is not unreasonable,” he said.
The popularity of Pokémon GO is producing an unexpected boom in some shares that have a scant link to the game.
Shares in First Baking, a bakery firm with annual sales of 25bn yen, saw its shares rise 18% as the firm sells “Pokémon Bread” among other breads wrapped with character-decorated bags.
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