Nintendo shares dive as it warns Pokemon Go impact on profits will be limited

Shares in Nintendo plunged on Monday after it warned that the Pokemon Go mania sweeping the world would not translate into bumper profits, taking the wind out of a dizzying rally that saw the company’s value more than double. The stock dived 17% to 23,405 yen by the break after the Kyoto-based firm warned in a statement Friday evening that the hugely popular game would have only a “limited” impact on its bottom line. Markets had cheered the app’s global success as a great sign for Nintendo’s nascent move into the mobile games market which saw it briefly overtake Sony in market capitalisation. But analysts had warned that the rally was overdone since the actual impact of the game on Nintendo’s finances would be moderate at best.

I think Nintendo issued that statement because it was uneasy with how high the shares were rising.

Hideki Yasuda, analyst at Ace Research Institute

Nintendo said that it was leaving its profits forecast for the current financial year to March 2017 unchanged. “Taking the current situation into consideration, the company is not modifying the consolidated financial forecast for now,” the statement said. Nintendo is the creator of the Pokemon franchise but the game, released on July 5, was developed by US-based Niantic. The Japanese firm’s affiliate, Pokemon Company, is on track to receive licensing fees for the game. Since its launch Pokemon Go has sparked a worldwide frenzy among users who have taken to the streets with their smartphones. The app uses satellite locations, graphics and camera capabilities to overlay cartoon monsters on real-world settings, challenging players to capture and train them for battles.