The Pokémon GO hype is over and Nintendo shares are getting destroyed

Photo: Jim Watson/ AFP/ Getty Images.

The amazing ride of Nintendo shares, fueled by the wild spread of its smartphone game Pokémon Go, appears to be over.

The Japanese tech giant’s shares more than doubled in value since the launch of Pokémon Go on July 6, putting its market value on Tuesday at $US42 billion.

However, today shares in the world’s largest video game company by revenue started to slip.

A short time ago, Nintendo was down 13.9% to 27,350 Yen on the Tokyo Exchange. The broader Nikkei 225 index was down just 0.7% at time of writing.

Today’s share price drop was the biggest for Nintendo in 16 years.

There’s likely some profit-taking going on after the explosive rally over the past week but also it shows that the market demand has eased.

Analysts have been trying to work out what the direct benefit of the new craze will be for Nintendo but this has been difficult to assess, according to the Wall Street Journal.

Nintendo only has part ownership of the app through its holdings in the Pokemon Company and Google spinoff Niantic which is the developer and the distributor of the game.

According to analysts, the rise in Nintendo shares only makes sense if half of all humanity has the Pokémon GO app.

Deutsche Bank asked: How many downloads of the app are need to justify such a rise in market cap?

But the popularity of the game marches on as the app gets released in different countries.

The app was due to be launched in Japan, the home of Pokemon GO, today but this was cancelled, apparently over fears that high demand would soon overload the system.

Techcrunch reported: “The postponement will frustrate many in Japan who are still waiting but, on the positive side, Niantic, Nintendo and the Pokémon Company — the three firms behind the smash game — are confident that, if the game is launched right, their servers can handle the undoubtedly huge demand.”

In Japan, McDonalds is a paying sponsor, using its Japan 3000 stores as venues for players.

NOW READ: Pokémon Go’s decline is already under way

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