Post by The Big Daddy C-Master on Jul 25, 2016 6:58:34 GMT -5
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After rising for the past two weeks, shares of Nintendo Co. Ltd. (NTDOY) sank by over 17% after the company warned its investors that the smartphone game “Pokemon Go” will not make any significant impact on its bottom line. At the time of closing, Nintendo stock was trading at 23,220 yen and was down by 5,000 yen, which is the maximum permissible limit for a day. About 6.3 billion yen of the company’s market value was wiped out in a single day.
The company also mentioned in a press release that it did not have any plans to revise the profit forecast as it had already accounted for the anticipated revenues from the game. It also highlighted that for the Pokemon App, the company generates licensing fees from Niantic Inc (the game’s developer) through its 32% owned subsidiary - Pokemon Co and the revenue would have a “limited” impact on its net income.(See also: Are Nintendo Shares Getting Overheated? )
Nintendo is a shareholder in both Niantic and Pokemon Co. but has an “effective economic stake” of merely 13%, as per David Gibson, an analyst at Macquarie Securities. Nintendo shares have witnessed a sharp jump since “Pokemon Go's” launch on July 6 in the United States, New Zealand, and Australia and are still trading 60% above that level.
Analysts Reaction
Analysts are surprised with the company’s press release. Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co, said, “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.” Fujimoto added, “The game has been published in Japan, so for the time being we’ve exhausted all the catalysts.”
Some analysts believe that investors should not be disappointed with the share plunge on Monday. Tsutomu Yamada, a market analyst at kabu.com Securities, believes that the success of Pokemon Go will help the company to win more leads for its new products. He added, “Nintendo is coming out of its recent downturn.”
Hideki Yasuda, an analyst at Ace Research Institute, said, “I think Nintendo issued that statement because it was uneasy with how high the shares were rising. There has been a view that Nintendo cannot succeed in the smartphone business.” Hideki added, “Even if Pokemon Go does not directly contribute to Nintendo's earnings, it owns other characters like Super Mario and Zelda. These things were factored in and boosted its shares.” (See also: How Nintendo Will Benefit From Pokemon Go.)
Continue to help McDonald's
McDonald's shares in Japan have soared after it announced a partnership with Nintendo to host the game at 3,000 of its outlets in Japan. Many analysts believe that McDonald's will benefit from this partnership. The food-chain has suffered from some quality issues in the past and is facing headwinds due to a downturn in the fast-food retail industry.
Ryozo Minagawa, an analyst at Nomura Securities, said, “We think that it is families that have been put off by a string of scandals at McDonald’s, and this customer group is also the target market for ‘Pokémon Go.”
After rising for the past two weeks, shares of Nintendo Co. Ltd. (NTDOY) sank by over 17% after the company warned its investors that the smartphone game “Pokemon Go” will not make any significant impact on its bottom line. At the time of closing, Nintendo stock was trading at 23,220 yen and was down by 5,000 yen, which is the maximum permissible limit for a day. About 6.3 billion yen of the company’s market value was wiped out in a single day.
The company also mentioned in a press release that it did not have any plans to revise the profit forecast as it had already accounted for the anticipated revenues from the game. It also highlighted that for the Pokemon App, the company generates licensing fees from Niantic Inc (the game’s developer) through its 32% owned subsidiary - Pokemon Co and the revenue would have a “limited” impact on its net income.(See also: Are Nintendo Shares Getting Overheated? )
Nintendo is a shareholder in both Niantic and Pokemon Co. but has an “effective economic stake” of merely 13%, as per David Gibson, an analyst at Macquarie Securities. Nintendo shares have witnessed a sharp jump since “Pokemon Go's” launch on July 6 in the United States, New Zealand, and Australia and are still trading 60% above that level.
Analysts Reaction
Analysts are surprised with the company’s press release. Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co, said, “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.” Fujimoto added, “The game has been published in Japan, so for the time being we’ve exhausted all the catalysts.”
Some analysts believe that investors should not be disappointed with the share plunge on Monday. Tsutomu Yamada, a market analyst at kabu.com Securities, believes that the success of Pokemon Go will help the company to win more leads for its new products. He added, “Nintendo is coming out of its recent downturn.”
Hideki Yasuda, an analyst at Ace Research Institute, said, “I think Nintendo issued that statement because it was uneasy with how high the shares were rising. There has been a view that Nintendo cannot succeed in the smartphone business.” Hideki added, “Even if Pokemon Go does not directly contribute to Nintendo's earnings, it owns other characters like Super Mario and Zelda. These things were factored in and boosted its shares.” (See also: How Nintendo Will Benefit From Pokemon Go.)
Continue to help McDonald's
McDonald's shares in Japan have soared after it announced a partnership with Nintendo to host the game at 3,000 of its outlets in Japan. Many analysts believe that McDonald's will benefit from this partnership. The food-chain has suffered from some quality issues in the past and is facing headwinds due to a downturn in the fast-food retail industry.
Ryozo Minagawa, an analyst at Nomura Securities, said, “We think that it is families that have been put off by a string of scandals at McDonald’s, and this customer group is also the target market for ‘Pokémon Go.”
