News Digest

Pokemon Go drives Nintendo’s surge as market value doubles to $42 billion

Shares of Japan’s Nintendo Co soared another 14% on Tuesday, more than doubling the company’s market capitalisation to 4.5 trillion yen ($42.5 billion) in just seven sessions since the mobile game Pokemon GO was launched in the United States. The phenomenal success of Pokemon 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.

Under my rough estimate, the sales from Pokemon GO and upcoming related gadgets will boost net profits by 50 billion yen. Based on that assumption, Nintendo is traded at 30 times profits, which is not unreasonable.

A fund manager at a Japanese asset management firm

Turnover in Nintendo shares hit 703.6 billion yen, surpassing the record for trading turnover in individual shares it set on Friday, of 476 billion 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 Pokemon 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.