ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Stocks

Is Nintendo's Pokemon bubble ready to burst?

Nintendo's stock has rallied since the release of the "Pokemon Go" smartphone game.

TOKYO -- As Nintendo continues to soar on the runaway success of "Pokemon Go," some market watchers are sounding the alarm over the stock's equally runaway valuation.

"I trade 5 billion yen to 7 billion yen [$47.1 million to $65.9 million] in daily value, and I earned a total profit of about 50 million yen," a retail investor here said of Nintendo. Turnover of the video game company accounted for about 30% of Friday's total on the first section of the Tokyo Stock Exchange. The stock price has roughly doubled since July 8.

Already a household name, Nintendo readily drew individual investors with its latest smash hit. Funds investing through high-frequency trading have also joined the fray, adding steam to its historic gains. Excess cash generated by the Bank of Japan's massive monetary easing program is also lubricating the bull run.

But Nintendo's earnings windfall from "Pokemon Go" may not live up to market expectations. The company owns just 32% of Tokyo-based Pokemon Co., which is entitled to a licensing fee from U.S.-based game operator Niantic. Nintendo said Friday that "Pokemon Go" will have only a "limited" impact on consolidated earnings.

Nintendo's price-earnings ratio nevertheless shot up to 97. The P/E ratio of McDonald's Holdings Japan, whose fast-food restaurants become official "PokeStops" and "gyms" under a tie-up, climbed to 481. Both multiples dwarfed the TSE first-section average of 15.

"Citing uncertainty over 'Pokemon Go's' lasting popularity, some retail investors are resorting to early profit-taking," said Tomoichiro Kubota, senior analyst at Matsui Securities. The heated Pokenomics rally could turn into a painful correction.

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media