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Stock markets are a strange thing. They are hugely important parts of the economy and can make or break companies, but at the end of the day, they are ultimately a measure of a company’s perceived value, not necessarily its actual value. The recent massive spike and ensuing drop in Nintendo’s stock is a perfect example of this.
When Pokémon Go launched and exceeded everyone’s expectations, many investors’ minds jumped straight to Nintendo, leading to a surge in the company’s stock, more than doubling its price. It started at ¥14,380 and got to as high as ¥31,770. Last week, on July 22, Nintendo released a statement to investors reminding them that Nintendo wasn’t the only one making money from the app. In other words, Nintendo was still making money, but it wasn’t nearly as much as many investors were imagining and not enough to significantly to shift the company’s bottom line.
Two of the most obvious hands in the Pokémon Go pot are Apple and Google, the companies that own the digital storefronts that host the game. And then there is the actual owner of the Pokémon brand, the aptly named Pokémon Company, which itself is split three ways between Nintendo, Game Freak, and Creatures. Of course, Niantic, the actual developer of the game, get its share as well; though Nintendo takes a piece of that as well because it also has a stake in the company too. While the exact math for how each dollar is divided isn’t public knowledge, it’s easy to see why Nintendo wanted to temper expectations.
Naturally, plenty of investors jumped ship and sold their stock just as quickly as they bought it, but Nintendo’s stocks are still up overall from where they started before the app released. As the end of trading on Monday, Nintendo was sitting at ¥23,320.
Source: Kotaku
Once again, this is a salute to Nintendo’s honesty.