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Immediately following Nintendo’s reminder that the company will not be getting the lion’s share of the profits made by “Pokemon Go,” investors started to run, leading to a $6.7 billion loss by Monday’s end. This is a record drop for the video game company, which is actually its worst in 26 years. Unfortunately, it seems that more bad news is set to arrive as the outlook for the company is not looking good right now.
As Bloomberg pointed out, the drop that Nintendo posted is the worst it has seen in over 26 years. After the Japanese company notified investors that it will not be changing its profit output in relation to the sudden popularity of “Pokemon Go,” the reality of the situation finally dawned on the disillusioned flock; Nintendo will not be swimming in cash because of the app, and neither will investors.
Even after the drop, however, the company was still valued at 109 times that of what it projected its net income will be. This means that Nintendo would have to produce a whopping 200 billion yen by the time the year ends, which is a far cry from the 35 billion yen that the company is forecasting. Even worse, analysts are saying that the number could actually be 30 billion, making reality 170 billion short of expectations.
Back in 2009, Nintendo pulled in 279 billion yen thanks to the popularity of Wii and 3DS gaming systems, but that was the last time the company came anywhere near that kind of profit. Judging by how analysts are expressing skepticism that the video game maker would ever reach the heights that it did at the time, it would appear that Nintendo simply had to break the news to investors in order to avoid a scandal.
On that note, analysts also reiterated the potential for the company to use its other IPs in order to boost the forecasted profit that Nintendo currently has. Among the examples provided is the “Pokemon Go Plus,” which is a badge that trainers wear that then syncs with their smartphones. Nintendo has also promised to deliver five titles in the mobile industry, which is encouraging if they come anywhere near what “Pokemon Go” managed to accomplish.
