NEWS
NEWS
NEWS
Nintendo’s Pokemon GO bubble bursts as stock prices tank
The phenomenal success of Pokemon GO caused Nintendo Co Ltd’s stock prices to soar to the highest they have been in years, but after the company recently downplayed the earnings it would make from the popular mobile game, those prices went plummeting by 17.7 percent
While Nintendo is a major investor in Pokemon GO creator Niantic Inc., it is only a partial owner of Pokemon GO. Nintendo’s relationship with the Pokemon brand itself is somewhat confusing, and it is not helped by the fact that many fans and even the media continuously refer to Pokemon as a Nintendo product. In reality, Pokemon belongs to The Pokemon Company, in which Nintendo holds 32 percent voting power. That means that while Nintendo has a major say in the development of Pokemon products and receives a portion of their profits, it does not directly own the franchise itself.
The recent drop in Nintendo’s share prices seems to have been a result of investors learning that fact, as Nintendo released a stock filing that clarified its role in the game and the profits the company expects to make from it.
“The Pokémon Company is [Nintendo’s] affiliated company, accounted for by using the equity method,” Nintendo said in the filing. “Because of this accounting scheme, the income reflected on [Nintendo’s] consolidated business results is limited.”
“Also, a peripheral device for use with the application, ‘Pokémon GO Plus,’ which will be produced and distributed by the Company, is scheduled for release. All of the above are reflected in the financial forecast ending March 31, 2017 as set forth on April 27, 2016.”
“Taking the current situation into consideration, the Company is not modifying the consolidated financial forecast for now. The Company will make a timely disclosure when the Company needs to modify its financial forecasts.”
Of course, even with this more recent downturn in its stocks, Nintendo’s share prices are still 60 percent higher than they were immediately prior to the launch of Pokemon GO, so the game has clearly been a boon for the Japanese game company. There is also a strong possibility that the popularity of Pokemon GO will help drive sales of the upcoming Pokemon Sun & Moon, which will be released on Nintendo 3DS on November 18.
Image courtesy of Niantic Inc
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