Nintendo stocks fall because Niantic made Pokémon Go

Posted on July 30, 2016

You would need to have been living in a Poké Ball to have avoided the craze that is Pokémon Go.

Since the game’s release, the stock price for Nintendo blasted off at the speed of light, over doubling in value on July 19th.  This rise in stock meant that on that day Nintendo as a company was worth more than Sony (Nintendo with US$39.8 billion versus Sony with US$38.34 billion).

Nintendo soaring share prices due to Pokémon GO saw it overtake Sony in company value
Nintendo soaring share prices due to Pokémon GO saw it overtake Sony in company value.  Image source: Bloomberg

Apparently however, investors did not realise that this record breaking game was made for Nintendo by Niantic Inc., an independent company that started from Google last year.  This is somewhat surprising considering this is a fact that was never hidden and common knowledge to anyone who has played the game, particularly those who had to restart their app continuously during its buggy premiere (ok it may still be buggier than a Caterpie).

It was only when Nintendo issued a statement stating this fact that stocks plummeted 17% in one day.  Nintendo clarified that although Niantic Inc. developed and distributed Pokémon Go, both Google and Nintendo have stakes in the company.  Nintendo also added the fact that it owns a 32% stake in The Pokémon Company that receives associated licensing fees and development and operational costs from Niantic.

So it looks as though investors were caught up in the hype of Pokemon Go more so than the players themselves.  The responsible players that is, let’s ignore the idiots driving and playing or breaking into private property .

The irony is that Nintendo will still profit quite nicely from Pokémon Go.  And this is not even taking into account the inevitable rise in sales of related Pokémon products, and the continual hype train towards the Pokémon Sun and Moon release date on November 18th.  Despite the rapid fall in share prices, Nintendo shares are currently still sitting ahead compared to before the game’s release also, so investors currently with Nintendo stocks can still be as happy as a Meowth on pay day.

I do not think Nintendo thought they would be celebrating their 20th anniversary in such a fashion.

(Main article image source: Google Finance)