Culture

Nintendo Suffers Huge Market Correction After Pokémon Go Launches in Japan

(Photo by Rodrigo Reyes Marin/AFLO) (via AP)

Just a few days ago, Nintendo was riding a market high that had seen its value double in less than two weeks.

That was so last Wednesday.

Nintendo Co. shares plunged by the most since 1990 after the company said late Friday that the financial benefits from the worldwide hit Pokemon Go will be limited.

The stock sank 18 percent to 23,220 yen at the close in Tokyo, the maximum one-day move allowed by the exchange, wiping out 708 billion yen ($6.7 billion) in market value. After debuting in the U.S. earlier this month, Pokemon Go launched in Japan on Friday and became available in Hong Kong on Monday.

The correction comes after Pokemon Go’s release almost doubled Nintendo’s stock through Friday’s close, adding $17.6 billion in market capitalization. Nintendo is a shareholder in the game’s developer Niantic Inc. and Pokemon Co., but has an “effective economic stake” of just 13 percent in the app, according to an estimate by Macquarie Securities analyst David Gibson.

There are stories that a lot of investors weren’t aware of Nintendo’s small share in the Pokémon Company and that created a little irrational market exuberance. OK, a lot of irrational market exuberance. The app has yet to launch in China, which would open it up to a huge market. However, the Chinese government restricts access to the geographical data the app needs to function properly.