Nintendo Shares Plunge 16 Percent After Pokemon Go Warning
The adjustment comes after the Japanese gaming giant's market capitalization more than doubled following the game's release.
Nintendo shares took a steep dive Monday after the company warned that the global Pokemon Go phenomenon would not translate into an immediate jump in profits.
The stock plunged about 16 percent to 23,720 yen in early trading, wiping out $6.3 billion in market value. The adjustment comes after the Japanese gaming giant's market cap more than doubled following the game's release earlier this month. Following Monday's decline, Nintendo shares are still up about 60 percent compared to their price prior to Pokemon Go's July 6 launch in the United States, Australia and New Zealand.
Investors had seen Pokemon Go's global popularity as a positive sign for Nintendo’s belated move into mobile gaming. But the company issued a brief statement after the close of trading Friday, warning that the impact of the game's success on its profits would be "limited." Nintendo, based in Kyoto, reports its financial results for the first quarter on Wednesday.
Nintendo created the Pokemon franchise, but the rights to the characters are held by The Pokemon Company. Nintendo owns 32 percent of The Pokemon Company and is reported to hold a similarly sized stake in Niantic, the U.S. lab that developed the Pokemon Go game. Niantic was a Google internal startup before being spun off, and the search giant remains an investor.
Nintendo has struggled in recent years with disappointing sales of its Wii U console, as casual gamers migrated to smartphones and tablets. The company had been reluctant to license its popular characters for games on other devices, but Pokemon Go's viral success is expected to accelerate its diversification.
Pokemon Go debuted in the franchise's home market of Japan on Friday. All eyes are now on China, where Nintendo and Niantic face a raft of challenges to gain access to the world's largest gaming market.