Nintendo doubles in value with Pokemon Go release

Gamers absorbed in Pokemon Go in the Austrian capital Vienna. The free app uses smartphone satellite location, graphics and camera capabilities to overlay cartoon monsters on real world settings, challenging players to capture and train the creatures
Gamers absorbed in Pokemon Go in the Austrian capital Vienna. The free app uses smartphone satellite location, graphics and camera capabilities to overlay cartoon monsters on real world settings, challenging players to capture and train the creatures for battles.PHOTO: EUROPEAN PRESSPHOTO AGENCY

TOKYO • Nintendo yesterday shot past Sony in market value when the Japanese videogame giant's stock more than doubled after the release of the wildly popular Pokemon Go game.

Shares soared 14 per cent, more than doubling the firm's market capitalisation to 4.5 trillion yen (S$57.2 billion) in just seven sessions, topping Sony - one of Japan's best known companies - by 300 billion yen.

Nintendo ended the day at 31,770 yen, bringing its gains to more than 100 per cent since the launch of the game on July 6.

The phenomenal success of Pokemon Go - available in 35 countries, the majority in Europe, and most recently in Canada - has triggered massive buying in Nintendo shares, surprising even some seasoned market players.

"I've never seen the trend of such a big company's shares changing so quickly in such a short period of time," said Mr Takashi Oba, senior strategist at Okasan Securities.

Nintendo set a record last Friday for the most shares ever traded daily in Japan. Yesterday, the counter roughly accounted for a quarter of the entire trading on the Tokyo Stock Exchange's main board.

Since its launch two weeks ago, the game for mobile gadgets has been a surprise hit and sparked a worldwide frenzy among users who have taken to the streets with their smartphones.

The free app uses smartphone satellite location, graphics and camera capabilities to overlay cartoon monsters on real world settings, challenging players to capture and train the creatures for battles.

Investors are betting its popularity is a good sign for Nintendo's nascent push into mobile gaming, a major U-turn for a company that long insisted on a consoles-only policy.

The Pokemon craze has also boosted other stocks in Tokyo. McDonald's Japan - which has been struggling to get past a series of food safety scandals - soared as much as 23 per cent in morning trade after it started giving away with its Happy Meals figurines based on the game's characters such as Pikachu.

Investors are flocking to stocks related to Pokemon, and McDonald's Japan is one of those benefiting from the boom, said executive officer Mitsushige Akino at Ichiyoshi Asset Management.

The success of Pokemon Go, unforeseen even by its creators, has boosted hopes that Nintendo could capitalise on a line-up of popular characters ranging from Zelda to Super Mario to strengthen its new foray into augmented reality.

"Virtual reality and augmented reality have been a focus of the market but hardly anyone was expecting Nintendo in this area. Suddenly Nintendo has become an AR-related stock," said a fund manager at a Japanese asset management firm who declined to be named. He added that the big share gains were justifiable, considering the likely boost to Nintendo's bottom line.

"Under my rough estimate, the sales from Pokemon Go and upcoming related gadgets will boost net profits by 50 billion yen. Based on that assumption, Nintendo is traded at 30 times profits, which is not unreasonable," the fund manager said.

REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on July 20, 2016, with the headline 'Nintendo doubles in value with Pokemon Go release'. Print Edition | Subscribe