Nintendo’s market cap doubles to $42 billion since Pokemon GO launch

TOKYO (Reuters) – Shares of Japan’s Nintendo Co (7974.T) soared another 14 percent on Tuesday, more than doubling the business’s market capitalization to 4.5 trillion yen ($42.5 billion) in only seven sessions since the mobile game Pokemon GO was established in the United States.

The extraordinary success of Pokemon GO – now accessible 35 states, the bulk in Europe, and most recently in Canada – has triggered enormous purchasing in Nintendo shares, surprising even some experienced marketplace players.

“I’ve never seen the tendency of such a large business’s shares changing so rapidly in this type of brief time period,” said Takashi Oba, senior strategist at Okasan Securities.

Nintendo shares ended Tuesday up 14.4 percent at 31,770 yen, bringing its increases to more than 100 percent since the start of the game on July 6.

Employee Turnover in Nintendo shares strike 703.6 billion yen, surpassing the record for trading turnover in individual shares it establish on Friday, of 476 billion yen.

Trading in Nintendo shares approximately accounted for a quarter of the whole trading on the Tokyo Stock Exchange’s main board.
The success of Pokemon GO, unforeseen even by its originators, has fostered hopes that Nintendo could capitalize on a lineup of popular characters ranging from Zelda to Super Mario to reinforce its new foray into augmented reality.

“Virtual reality and augmented reality have been a focus of the marketplace but barely anyone was anticipating Nintendo in this region. Unexpectedly Nintendo is now an AR-associated stock,” said a fund manager at a Japanese asset management firm, who declined to be named as he’s not permitted to discuss individual shares.

The fund manager said the large increases were justifiable considering the likely rise to Nintendo’s bottom line.

“Under my rough approximation, the sales from Pokemon GO and forthcoming connected gadgets will improve net profits by 50 billion yen. Based on that premise, Nintendo is traded at 30 times gains, which isn’t excessive,” he said.

The popularity of Pokemon GO is making an unexpected boom in some shares that have a short connection to the game.
Shares in First Baking Co (2215.T), a bakery business with yearly revenues of 25 billion yen, saw its shares climb 18 percent on Tuesday as the company sells “Pokemon Bread” among other breads wrapped with character-decorated bags.