Nintendo Stocks Drop Due to Pokemon Go Concerns

Nintendo's meteoric stock jump came to an end last week after the company sent a note to investors informing them about the limited impact Pokemon Go will have on their bottom line. The stock dropped almost 20% today after Nintendo reminded investors that it had only a minority partnership in the game.

Nintendo is a co-owner of the Pokemon copyright, along with the video game developer Game Freak (which originally designed and continues to develop the core Pokemon games) and Creatures, Inc., a subsidiary of Nintendo that runs the licensing arm of the Pokemon franchise. Nintendo is also an investor in Niantic Labs, the developer of Pokemon Go, but it doesn't outright own Niantic or the Pokemon Go app. In fact, Nintendo's ultimate share of Pokemon Go is only 13%, far less than many investors realized.

That doesn't mean that Nintendo won't make any money off of Pokemon Go. The company is producing the Pokemon Go Plus, a bluetooth device that works in conjunction with the game. It also receives a sliver of the profit from the in app purchases and other revenue (such as corporate sponsorships) from the actual Pokemon Go game. However, Nintendo already incorporated those streams of revenue into its quarterly projections and the company doesn't believe that it will exceed those original figures.

Given the popularity of Pokemon Go and its development in other mobile gaming apps that don't involve the complicated ownership of the Pokemon franchise, it's likely that Nintendo will still make plenty of money on mobile gaming. Nintendo's stock could jump once again once the company announces future plans for mobile gaming and the NX system later this year.

(via Bloomberg)