The Nintendo company's stocks in the Tokyo Stock Exchange (TSE) suffered a general decline during the early morning of July 25.
Following the company's official announcement on July 22, Nintendo's shares in the TSE fell as much as about 17 percent or 4,965 yen ($46.69) in the mid-morning trade, which is essentially just one point away from the daily allowed fluctuation limit of 18 percent or 5,000 yen ($47.10). Still, the company's stocks in Tokyo remain a positive trend overall in contrast to the previous month, gaining an increase of about 67 percent after the game's release.
The statement, which would send some $6.4 billion off the company's total market value, clarified that Pokémon GO, despite its recent success in the public's eye, will have no foreseeable effects on the company's annual revenue that would necessitate a change in Nintendo's annual forecast. According to Variety, the numbers will remain the same at 291.35 yen ($2.74) earnings per share, 35 billion yen ($329 million) in net attributable profits, 45 billion yen ($423 million) in ordinary revenue and net sales of about 5 trillion yen ($47 billion).
"The content of the announcement itself is not that shocking," comments senior market analyst Nobuyuki Fujimoto at SBI Securities Co., noting that it is surprising Nintendo issued the statement days before the company's usual earning reports, scheduled on July 27 when the market closes.
The company's unexpected announcement may be attributed to a recent investment growth over the past week. Since Pokémon GO's been doing overwhelmingly well in the industry, investors hitched a ride on the bandwagon and focused sources into the company's shares. However, as the company describes, developer Niantic Inc. only pays licensing fees to and "compensation" for the collaboration provided by the Pokémon license owner, The Pokemon Company — through which Nintendo only owns 32 percent of voting powers, "accounted for by using the equity method."
"Because of this accounting scheme, the income reflected on the company's consolidated business results is limited," writes Nintendo's official statement, reiterating that the company "is not modifying the consolidated financial forecast for now" until such time when it needs to.
The company did note that the accessory product for the game, Pokémon GO Plus, will be manufactured and shipped by Nintendo and is already scheduled for release. Pokémon GO Plus is a wearable device that will alert players of nearby Pokémon in the area and can be used as an alternative to catch these Pokémon instead of the usual swipe up.
Photo: Jeff Dlouhy | Flickr
