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Nintendo Games

Nintendo Shares Plummet After Investors Realize It Doesn't Actually Make Pokemon Go (theverge.com) 192

Posted by msmash from the reality-check dept.
Sam Byford, reporting for The Verge: Nintendo shares have skyrocketed since Pokemon Go's release and instant transformation into global cultural phenomenon, but they fell dramatically today after investors realized that Nintendo doesn't actually make the game. Nintendo put out a statement after the close of trading on Friday pointing out that the bottom-line impact will be "limited" as it only owns 32 percent of The Pokemon Company, and that revenue from the game and its Pokemon Go Plus smartwatch peripheral have been accounted for in the company's current forecasts. Pokemon Go is a collaboration between The Pokemon Company and Niantic Labs, the developer who previously created the similar AR game Ingress as part of Google. This apparent revelation caused shares to plummet in Monday trading, with the stock dropping 17 percent at one point, representing about $6.4 billion in value; as Bloomberg notes, Tokyo stock exchange rules prevent share prices from moving more than 18 percent in a single day.
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Nintendo Shares Plummet After Investors Realize It Doesn't Actually Make Pokemon Go More

Nintendo Shares Plummet After Investors Realize It Doesn't Actually Make Pokemon Go

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  • Breaking news: investors are idiots (Score:5, Insightful)

    by jxander ( 2605655 ) on Monday July 25, 2016 @11:46AM (#52576069)

    The real news here isn't really about Nintendo or Pokemon.

    The real news is about investors pumping billions into a company without even the most cursory research.

    • Re:Breaking news: investors are idiots (Score:5, Interesting)

      by geek ( 5680 ) on Monday July 25, 2016 @11:49AM (#52576103)

      The real news here isn't really about Nintendo or Pokemon.

      The real news is about investors pumping billions into a company without even the most cursory research.

      Gotta jump on them stocks fast!

    • Knew I should have shorted Nintendo when I saw the articles saying their share prices sky rocketed with the release of Pokemon.

      • This. A lot of money was still made.

      • Short now dude... I'm guessing they will shed another 18% once the retail investors find out the stock just tanked and their 401k's just took a hit..

        Wana make even more, quicker, with less investment? You should have considered options when it was on the way up. Could have traded a bunch of contracts which would now be "In the money" big time.. (How would you like to have a pile of PUTs at 10% under the peak price right now? They would have been cheep on Friday.)

        • Re:Breaking news: investors are idiots (Score:5, Insightful)

          by StikyPad ( 445176 ) on Monday July 25, 2016 @01:41PM (#52576995) Homepage

          Unfortunately, the laws of physics still forbid investing with the benefit of hindsight.

          • Read the article... This stock hit the stops in Tokyo which stops trading a stock that looses 18% in one session. Read my reply, I clearly state that I expect it's going to continue to fall in the next session. You may not be able to trade the stock right now, but you CAN trade options.

            But none of that matters, I was telling somebody what they *should* have done when they said the following:

            Knew I should have shorted Nintendo when I saw the articles saying their share prices sky rocketed with the release of Pokémon.

            I was telling them that you could make more using options than selling short with about the same risk, likely wit

            • Re: (Score:2)

              by AK Marc ( 707885 )

              I was telling them that you could make more using options than selling short with about the same risk

              You make about the same with about the same risk. Some people prefer one over the other, but in practice, they are effectively interchangeable. Options reduce maximum loss (risk) and maximum gains. If you use options and the price doesn't change, you lose money. If you sell short, and the price doesn't change, then you don't lose money. Options are better about magnifying investments. A smaller payment for a greater potential gain. So long as you don't finance your sell short, which so many do, in whi

              • You are thinking way too one dimensional on how options trading works. There are many ways options are used.

                Just doing option trading is usually only successful when you are armed with a workable strategy and that usually involves some kind of technical analysis and automation that looks for specific queues in the options chains for favorable conditions for a transaction. Such trading is usually very high frequency, and traders are in and out in seconds or min.

                Mixing options into a trading strategy wher

            • but you CAN trade options.

              Only if you find a really stupid person to trade with.

              Believe it or not: You can't just walk into a stockbroker and buy whatever you want. Sometimes they say "no".

        • Wana make even more, quicker, with less investment? You should have considered options when it was on the way up.

          Wow, that is a great idea! Do you have any other investment tips that require a working time machine?

      • Re: (Score:2)

        by Pascoea ( 968200 )
        I was thinking the same thing... That could have been a nice boost the the trading account.

      • Instead of shorting, I would suggest to just sell the stocks.
        Shorting Stocks is buying against the company. So you will have 100 stocks in Nintendo and 100 stocks against Nintendo in essence 0ing your value.

        Now Stock shorting is good for reducing volatility in stocks where a similar stock is expected to follow the trend, but not as much. So if both go up, the more volatile stock will still go up but not as much. And when they go down the same thing. Preventing a massive crash.

        • Re:Breaking news: investors are idiots (Score:5, Insightful)

          by randm.ca ( 901207 ) on Monday July 25, 2016 @12:56PM (#52576691) Homepage
          I'm guessing a lot of the people who wished they had shorted don't have any stock to sell, so "just sell the stocks" isn't an option and short selling makes more sense.

          • Not only that, but they don't understand the costs involved. 18% sounds like easy money, but you pay a commission to buy and sell, and you also pay rent for the stock that is already priced based on the fact it might go up/down. In the end you could have made a tiny bit of money, or lost some. And if you're shorting things frequently, you'd be losing a lot of money even if you believed each of them would move 18% because you have to be right, and right on the right days.

            Probably a lot of these people saying

            • Re: (Score:2)

              by nyet ( 19118 )

              Or buy a put option.

              • You're still adding overhead, it costs you more than just buying and selling regularly. So if you're actually able to time price swings, you would make less money. And if you turn out to only be average at it, you lose money.

            • This is why I don't actually short, or usually even buy individualy, stocks. I just crack wise about it on discussion forums. I much prefer funds and long term for actual investing.

            • Re: (Score:2)

              by NotAPK ( 4529127 )

              Well said.

              Watch The Big Short [imdb.com] for more information delivered in a very entertaining format.

      • You should have shorted it right after you installed the app and say it was garbage. It's a real stretch to even call it a game. The user base is already declining.
        https://www.surveymonkey.com/b... [surveymonkey.com]

    • Re:Breaking news: investors are idiots (Score:4, Informative)

      by Anonymous Coward on Monday July 25, 2016 @11:52AM (#52576153)

      The real news here isn't really about Nintendo or Pokemon.

      The real news is about investors pumping billions into a company without even the most cursory research.

      Investors, by definition, would have sought enough information to know this. The trouble is with the traders, including the automated algorithms that trade based on news wire feeds.

    • Not the ones that cashed out. They knew what would happen. Deciding when was the tricky part. All these unicorns out there might crash the entire market real good this fall. It's the new "sub-prime" thing. Here's lookin' at you, Uber..

      Best to get out in AugustSeptember and reenter in December/January to pick up the pieces real cheap. Even if the market doesn't crash, it will take its usual election year dip, so there's still money to be made.

      • Re:Breaking news: investors are idiots (Score:5, Insightful)

        by tnk1 ( 899206 ) on Monday July 25, 2016 @12:18PM (#52576381)

        It's not really all that hard, you just have to avoid greed. You sell some as soon as it hits a predetermined point, and some more at another higher predetermined point. Remember, if goes even higher, you aren't losing money by not getting that price, you've made money no matter what. Nintendo isn't a pump and dump stock, so if you end up with some left over at the normal price when the bubble pops, you're doing just fine.

        Also, when the stock plummets you have some buy orders when the market irrationally decides that now the company is completely worthless because it isn't overpriced and you make even more money by using your gains on Nintendo to buy Nintendo when everyone is underpricing it. When Nintendo's stock price levels out, you've made even more money.

        You will have a problem if you're holding all your cash for that "perfect moment" where you can maximize your take. That's how you end up getting your ass handed to you in sudden downturns in price or you simply miss most of the profit. Free money is free money. Don't get greedy.

        • What you are describing is called "investing". What most people want out of the stock market is better described as "gambling".

      • This is why God invented options... You can, for a minimal investment, hedge yourself and make it less necessary to time the buy's and sells exactly right.

        Better yet, don't get into risky positions with fast moving stocks going in either direction.... Any time you are trading on split second timing, I can assure you the big boys will always win that game. Best to not play games you are sure you cannot win.

      • Unicorns crashing are unlikely to cause a crash of the 2008 type. That happened because the housing market was out of control AND because housing "packages" were resold 6 or 8 times, thus creating an illusion of 6 or 8 times the amount of money existing. (In the sense that a classical savings&loan doubles the apparent amount of money available).

        I rather doubt than a unicorn crash could even rival the first dotcom crash circa 1999.

    • The real news is about investors pumping billions into a company without even the most cursory research.

      I wouldn't necessarily call that news....did you see how much Theranos was valued at just under a year ago, before it came to light that they didn't have anything revolutionary?
      https://science.slashdot.org/s... [slashdot.org]

      That $9 Billion valuation was given by Forbes.....not just a bunch of day traders buying up stock. If a "respected" voice in the financial industry can get it that wrong, I don't expect John Q Public to do any better.

      • Re: (Score:2)

        by slew ( 2918 )

        That $9 Billion valuation was given by Forbes.....not just a bunch of day traders buying up stock. If a "respected" voice in the financial industry can get it that wrong, I don't expect John Q Public to do any better.

        Actually valuation numbers like "$9B" simply meant that a company claims that for the amount of money received from some sucker, the investors only got "N%" share** of the company.

        In the case of Theranos, it was N~4%. Forbes (and other industry trade-press) did not give the valuation, it merely reported what Theranos said some sucker private equity firms were bamboozled into paying for a share of the Theranos dream...

        Maybe John Q Public doesn't get that this effectively means the news source of the valuati

    • The Twitter generation has started investing.

    • Which isn't really news either, because stock brokers and investors are idiots.

      • Re: (Score:2)

        by slew ( 2918 )

        Which isn't really news either, because stock brokers and investors are idiots.

        Actually, stock brokers are not the idiots in this scenario because they are the ones that made money on commissions because of the idiot investors want to buy shares (and they will make money again when the investors sell the shares for a loss).

        As they say, look around the poker table: if you can’t see the sucker, you’re it...

    • Seems most investors don't research now anyway...it is all automated with HFT. The trick is to modify and change your algorithms before you get stuck with a bunch of stock that goes worthless fast...

    • Re: (Score:2, Interesting)

      by pr0fessor ( 1940368 )

      I don't play the game or invest in nintendo but even I already knew this. My brother pointed out that Niantic had made another game he thought sucked the day it came out.

    • I don't know if I'd call it news so much as a reminder of the obvious.

  • The herd realized it over the weekend and sent each other emails? How does this happen en masse? Suddenly one person realizes something that is publicly available information, and mentioned in many articles? Presumably at least *some* people knew.

    • The news seems to miss the news, and pat itself on the back.

      Nintendo "doesn't actually make Pokemon Go," they just own a significant portion of the Pokemon company. Oh, so they do own that. Oh, they don't actually make the software for the game... but they are the major owner of the company that sells the license and makes the money off merchandise.

      Who is more clueless, the investors that thought this being such a huge market hit that there are Pokemon zombies on all the sidewalks would sell merch, or the r

  • idiots (Score:3)

    by jsepeta ( 412566 ) on Monday July 25, 2016 @11:58AM (#52576185) Homepage

    Nintendo has lots of worthy IP that could be made into mobile games, using Mario, Link, etc. There's plenty of potential left at Nintendo if they simply move beyond console gaming.

    • You are correct. In fact Niantic has already announced plans for Mario Kart. It's gonna be a smash hit!

    • Re:idiots (Score:5, Interesting)

      by Touvan ( 868256 ) on Monday July 25, 2016 @01:00PM (#52576729)

      Nintendo's position seems to be that they can keep innovating in the console space, and keep their position atop a heap of their own making. They don't want to deliver on someone else's platform, because it isn't as profitable. They are going after big long term profit, not reactionary short term profit.

      No matter how many times folks at Nintendo explain this, people still don't seem to get it - maybe the same people who invest in Nintendo after another company releases Pokemon Go. Or maybe because it's a bigger gamble or bolder play, and most people are very risk averse, they can't wrap their heads around it?

    • Yeah what idiots. They only had revenues of $4.6bn USD last year from their IP on consoles. It's incredible how stupid they are for sticking to what they know best.

    • Re: (Score:3)

      by guises ( 2423402 )
      Why do people keep trying to push Nintendo into the mobile world of awful freemium games and touchscreen-only controls? It's possible that they may end up there, as cell phones continue to devour other electronics, but this would represent a loss from the gamers' perspective, as another source of quality gaming dries up. It would also mean giving 30% of their revenue to Google/Apple. I can't see why Nintendo would be in any rush to do that, and I can't see why anyone else would want them to. (Other than Goo

  • Up, down, flying around (Score:4, Informative)

    by wonkey_monkey ( 2592601 ) on Monday July 25, 2016 @12:03PM (#52576229) Homepage

    It's still 60% above what it was on 7th July... but doesn't seem to be done plummeting yet.

    Just let them get Wii U Zelda out before folding, eh?

    Here's something for graph fans, since there wasn't one of the share price:

    http://abstrusegoose.com/191 [abstrusegoose.com]

    • Re: (Score:2)

      by Khyber ( 864651 )

      Nintendo has been around for a very, very, VERY long time (late 1890s?)

      If you think they're going anywhere, you're sorely mistaken.

  • Great example of a key flaw in the stock market (Score:5, Insightful)

    by sabbede ( 2678435 ) on Monday July 25, 2016 @12:03PM (#52576231)
    Too much emotion, not enough reason. Excess enthusiasm and pessimism are the top causes of market instability. People got whipped up into a buying frenzy based on bad/incomplete information, and a third party (Nintendo) suffers for it.

    Automated trading only reinforces the problem, since it magnifies emotionally driven market conditions.

    • Too much emotion, not enough reason.

      Reason has been educated out of our system, and replaced with Emotion. Much easier to manipulate the masses is all you have to do is cry "Hate" and have a bunch of kneejerk reactionaries goosestep the same way.

      These things are related.

    • Re: (Score:3)

      by tnk1 ( 899206 )

      I wouldn't worry, this is hardly going to put Nintendo out of business. The only losers are those who didn't understand that this was a bubble and that they needed to take their money while they could get it while it was streaking upward, because it was very soon to come straight down again.

      Nintendo will bounce off of the opposite and equally emotional response to sell and be back at their usual price in a little while.

      If we'd only stop bailing out the losers who make these kinds of mistakes, the market wo

    • and a third party (Nintendo) suffers for it.

      Man I wish I could suffer so much that I'm still worth 50% more than what I was despite the tumble.

      • Point taken. Still, a lot of sloppy market players will focus on the drop, potentially stigmatizing the stock, but on the whole it should wash out.

    • Re: (Score:2)

      by ljw1004 ( 764174 )

      Too much emotion, not enough reason. Excess enthusiasm and pessimism are the top causes of market instability. People got whipped up into a buying frenzy based on bad/incomplete information, and a third party (Nintendo) suffers for it.

      How has Nintendo suffered? I can't see how.

      • People are lazy and perceptions are biased. People will get hung up on the drop, some will have lost a good chunk of cash, and because nobody wants to accept that their collective action is to blame, they'll shift the blame to Nintendo. Not all players will, probably not even most, but enough to tarnish reputations. But that's the game, and Nintendo will be fine.

    • Now, now. I've been told time and time again that the efficient markets hypothesis is true, and anyone who says otherwise simply doesn't understand economics.

  • Who saw this coming? (Score:3)

    by dlenmn ( 145080 ) on Monday July 25, 2016 @12:10PM (#52576315)

    I'm surprised so many people didn't see this coming. The share price was totally out-of-whack with reality. I'd have shorted the hell out of Nintendo's stock (if I had money and the means to do so). Surely, someone with money did? Anyone here?

  • Mark Twain quote from The Big Short (Score:4, Insightful)

    by Doaner ( 1001890 ) on Monday July 25, 2016 @12:16PM (#52576361) Homepage
    “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

  • Pump and dump Does someone need to look in to this

  • Isn't the Pokemon Company the company that handles Merchandising, but Game Freak the ones that create and Publish the games? Isn't it supposed to be the case that Neither of these companies directly tied to Nintendo, and Game Freak could be considered a Third Party Developer like WayForward?

  • " revenue from the game and its Pokemon Go Plus smartwatch peripheral have been accounted for in the company's current forecasts." Investors thought this craze and everyone playing it was totally unexpected.

  • Shares falling %17 after growing nearly %100, meh (Score:4, Informative)

    by Timmy D Programmer ( 704067 ) on Monday July 25, 2016 @12:46PM (#52576629) Journal
    A %17 pullback after doubling? seriously, that's not hardly a plummet

  • Is this accurate? (Score:4, Interesting)

    by wardrich86 ( 4092007 ) on Monday July 25, 2016 @12:53PM (#52576673)
    Did they really jump-ship for that reason? Nowhere in the game is Nintendo even mentioned. I never did understand the stock jump with Nintendo, though. I figured if anything, Pokemon Company, Game Freaks, or Niantic would be the ones that would skyrocket (assuming they're tradeable companies).

    Now I'm seriously confused as to how the stock market works. Is it really full of that many idiots that just throw money at anything without doing ANY research beforehand? The only real tie that Nintendo has with Pokemon is their tie to The Pokemon Company, so why didn't people jump on those stocks?

    • As USians, we can't buy The Pokemon Company (it's a Japanese company), and Niantic isn't publicly listed, so we can't buy it either. Nintendo is listed in Japan, but it trades here under a special stock called an ADR (American Depository Receipt) here in the US. Since Nintendo owns parts of these other companies, buying the ADR was the only way some investors could get in on the action.

      As I watched the stock, it jumped initially because of the Pokemon Go news (from ~$17 to $27), then it consolidated. That a

      • Some analysts have appeared to suggest that the 30% iTunes cut from in game purchases of poke-crap might net them $1B over the next couple years...
        Of course that's a drop in the bucket for Apple, and everything may fizzle before poke-crap becomes popular, so you never know...

    • Pokemon is owned by three companies.

      Nintendo
      Game Freak
      Creatures

      Game Freak and Creatures are both subsidiaries of Nintendo.

      They all have different roles in what happens with the IP.

      Niantic is a subsidiary of Google who writes mobile games leveraging the Google Maps data.

    • Re: (Score:2)

      by MobyDisk ( 75490 )

      I am surprised that people don't think that Niantic owns the Pokemon trademark. Take a look at the title screen. [ytimg.com] It says "Niantic <br/> [Niantic Logo] <br/> The Pokemon Company." It looks like "The Pokemon Company" is Niantic's tagline. That's not typically how a company is named.

  • In other news, people who invest in stocks are often idiots with no clue as to 1) how the market works, 2) who makes what, or 3) why a stock price goes up or down.

    I'm only surprised they weren't calling their stock brokers and telling them to "Get me 5000 shares of something called 'Pokemon!'"

  • I don't think folks on the market were idiots, at some point due to market hype some folks hopped on hoping to ride the wave and to jump before it crashed. I think a lot of folks knew that it was way overvalued but decided to buy into it in the hopes to catch the wave. Some high speed trading systems that caught it early probably managed to make some decent money before it started to collapse again.

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