Nintendo Shares are Getting Destroyed as the Pokémon Go Effect Wears Off

Nintendo Shares are Getting Destroyed as the Pokémon Go Effect Wears Off
Image credit: Reuters | Chris Helgren
Reporter, Business Insider Australia
2 min read
This story originally appeared on Business Insider

The amazing ride of Nintendo shares, fueled by the wild spread of the smartphone game Pokémon Go, appears to be over.

The Japanese tech giant's shares more than doubled in value after the launch of Pokémon Go on July 6, putting its market value on Tuesday at $42 billion.

On Wednesday, however, shares in the world's largest video game company by revenue started to slip.

A short time ago, Nintendo was down 13.9% to 27,350 yen on the Tokyo Exchange. The broader Nikkei 225 index was down just 0.7% at time of writing.

Wednesday's share-price drop was the biggest for Nintendo in 16 years.

There is most likely some profit-taking going on after the explosive rally over the past week, but it also shows that the market demand has eased.

Analysts have been trying to work out what the direct benefit of the new craze will be for Nintendo, but this has been difficult to assess, according to The Wall Street Journal.

Nintendo has only partial ownership of the app through its holdings in The Pokémon Company and the Google spin-off Niantic, which is the developer and the distributor of the game.

According to analysts, the rise in Nintendo shares makes sense only if half of all humanity has the Pokémon Go app.

But the popularity of the game marches on as the app gets released in different countries.

The app was due to be launched in Japan, the home of Pokémon Go, on Wednesday, but the launch was delayed, apparently over fears that high demand would soon overload the system.

TechCrunch reported: "The postponement will frustrate many in Japan who are still waiting but, on the positive side, Niantic, Nintendo and The Pokémon Company -- the three firms behind the smash game -- are confident that, if the game is launched right, their servers can handle the undoubtedly huge demand."

McDonald's will be a paying sponsor in Japan, using 3,000 of its stores there as venues for players.

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