Shares in Japanese videogames giant Nintendo rose another 14 percent today, doubling its market capitalisation to $42.5 billion in seven trading sessions since the game Pokemon GO launched in the US.
The huge success of Pokemon GO, which is now available in 35 countries (mostly in Europe) and just recently Canada, has led to a surge in buying of Nintendo shares.
“I’ve never seen the trend of such a big company’s shares changing so quickly in such a short period of time”, said Takashi Oba, senior strategist at Okasan Securities.
The firm’s shares rose on Tuesday to finish up 14.4 percent at 31,770 yen, more than 100 percent gains since the game launched on July 6th.
Turnover in the firm’s shares reached more than 703 billion Yen, beating the record set on Friday of 476 billion Yen, and accounted for around a quarter of the entire trading on the Tokyo Stock Exchange.
Pokemon GO’s success, which was not expected even by its creators, raised hopes Nintendo could capitalise on its most well known characters such as Super Mario and Zelda, to boost its venture into augmented reality.
“Virtual reality and augmented reality have been a focus of the market but hardly anyone was expecting Nintendo in this area. Suddenly Nintendo has become an AR-related stock”, said a fund manager at a Japanese asset management firm.
He said the big gains were justifiable considering the likely boost to Nintendo’s bottom line.
“Under my rough estimate, the sales from Pokemon GO and upcoming related gadgets will boost net profits by 50 billion yen. Based on that assumption, Nintendo is traded at 30 times profits, which is not unreasonable”, he said.