Nintendo shares plunge 18pc on dashed ‘Pokemon Go’ hopes

Nintendo Co. shares plunged by the most since 1990 after the company said late Friday that the financial impact from the worldwide hit game ‘Pokemon Go’ will be limited.

The stock sank 18 per cent to 23,220 yen (Sh22,200) at the close in Tokyo, the maximum one-day move allowed by the exchange, wiping out 708 billion yen (Sh677 billion) in market value, Bloomberg reports.

After debuting in the U.S. earlier this month, Pokemon Go launched in Japan on Friday and became available in Hong Kong on Monday. The correction comes after Pokemon Go’s release almost doubled Nintendo’s stock through Friday’s close, adding $17.6 billion (Sh1.79 billion) in market capitalization.

Nintendo is a shareholder in the game’s developer Niantic Inc. and Pokemon Co., but has an “effective economic stake” of just 13 per cent in the app, according to an estimate by financial services group Macquarie Securities analyst David Gibson.

“It’s still possible to say that in the short-term it’s overheated,” said Tomoaki Kawasaki, an analyst at investment group Iwai Cosmo Securities Co.

In a press release after the market closed on Friday in Japan, the Kyoto-based company said the game’s financial impact will be “limited” and that it is not necessary to revise its annual forecast even after factoring in current conditions. It also said revenue from Pokemon Go Plus, a Nintendo-produced accessory for the game expected to go on sale soon, has already been factored into the current guidance.

“The content of the announcement itself is not that shocking, but it is a surprise they said it on Friday instead of when they report earnings” later this week, said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. “The game has been published in Japan, so for the time being we’ve exhausted all the catalysts.”

The company will report first-quarter earnings on Wednesday after the market close, a period which ended before the release of Pokemon Go.

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