Shares in Nintendo Co. on the Tokyo Stock Exchange tumbled as much as 18 percent on Monday after the company said Pokémon GO would have a limited impact on its earnings.
It was the largest decline since the Pokémon GO app was rolled out in the US on July 6, starting an international phenomena.
Nintendo shares close Monday at 23,200 yen, down 17.7 percent, or 5,000 yen, the maximum decline allowed under local securities regulations.
The shares closed at 14,490 on July 5, the day before the wildly-popular app was rolled out in the US. By July 19, shares had soared 122 percent, to 32,120.
Monday’s decline followed a statement by the company that despite its 32 percent stake in its Pokémon Co. affiliate, its profit upside from the game would be limited. It didn’t raise its profit estimates for the year.
The stock decline left Nintendo shares down 28 percent over four trading sessions.
The Kyoto-based gaming company will report results on Wednesday.
The stock is tied to Nintendo’s ability to profit from the game and is not reflective of a fall-off in the game popularity. In fact, Pokémon Go remains wildly popular.
Some market players said Nintendo was being disingenuous, adding that there were few expectations of upward revisions to its profit targets so early after the game’s launch and that it was clear the game would be key to earnings.
“The market has overreacted to the Nintendo statement,” said David Gibson, a senior analyst at Macquarie Securities Group, noting the game in Japan had broken records with 10 million downloads in one day.
“I believe that Pokémon GO will be material in the company’s earnings given the current trends for the game.”
Pokémon GO’s success has triggered massive buying in Nintendo shares and even with Monday’s decline, the shares are still up some 60 percent compared with levels prior to the game’s July 6 launch in the US, Australia and New Zealand, adding nearly $12 billion in market value.
Yasuo Sakuma, portfolio manager at Bayview Asset Management, said he still saw the company’s shares as cheap given the potential for Nintendo to reap rewards from other strong character franchises as it forays deeper into mobile gaming.
“Nintendo is well-placed to boost its earnings with its other characters, such as Super Mario and Zelda and their potential is unknown,” he said.
Pokémon GO is Nintendo’s first venture into mobile gaming as the company had until recently been keen to protect its console business from cannibalization.
In addition to its stake in Pokémon Company, Nintendo has an undisclosed holding in Niantic Inc. — the game’s developer, which was spun off from Google.
It is also expected to benefit from sales of Pokémon GO Plus — an accessory that alerts players to nearby Pokémon so that they don’t have to always be looking at their smartphones. Nintendo said, however, that sales of the device have already been factored into its earnings outlook.