A little while ago we wrote about Pokémon GO being a surprising gift for Nintendo. Though it has a stake in the app and evidently had some senior level input into the app, it's a Niantic-developed game in which Nintendo is just one of multiple major investors. Nintendo was a brand on many lips around the release almost by default, and its resulting share price spike broke records on the Tokyo stock exchange.
Many of those investors were jumping on board in anticipation of big dividends, of course, as news of extraordinary downloads and daily revenues well in excess of $1 million were estimated even in the app's early days. Some reality has sunk in now, however, with Nintendo taking a calculated hit before it unveils its Q1 financial results for the year later this week.
With industry figures such as Macquarie Securities analyst David Gibson estimating Nintendo's financial stake in Pokémon GO (based on its ownership of stakes in Niantic and to an extent The Pokémon Company) to be potentially as low as 13%, Nintendo came out in a note to investors and said that any impact from the app's success will be "limited"; it won't be changing its revenue and profits estimates for the year, either, keeping them at the positive but relatively modest levels announced back in May. In other words, due to the big N's actual stake in GO and how profits will be handled and distributed, it's not expecting to make a great deal of extra money from the app this financial year, and has also advised that sales of the PLUS accessory were already factored into its original estimates.
Unsurprisingly this didn't go well in the Tokyo exchange - Nintendo shares plummeted around 18% (the most allowed in the exchange's rules) to 23,320 Yen, apparently the biggest one-day drop in the company's share value since 1990, and accounting for around $6.7 billion in overall company value.
They may fall further in the next day's trading, which will be something to take a look at - Nintendo shares are still more than 60% higher than they were before the GO boost, so it's a question of how much benefit they can hold once the dramatic slump in value ends.
In some ways reality is biting after a lot of hype, though clearly some financial benefit had been expected, even if not at levels to sustain the huge jump in share value of the last two weeks. In any case, Nintendo's next set of financial results will be revealed on 27th July.