Nintendo (TYO: 7974) suffered greatly after the 2007 financial crisis, falling from a peak stock valuation of ¥70,500 per share in late 2007, and recovering to shadow of its former glory at ¥14,660 per share on July 1st, 2016. However, Nintendo seems to be ready for a comeback after the release of Pokémon Go, an augmented-reality mobile game developed in partnership with Niantic Labs, a Google spin-off.
After the release of Pokémon Go on July 6th, Nintendo experienced its best day of trading since 1983 (when it released its iconic Nintendo Entertainment System). In the week after its release, Nintendo's stock price has increased by 56% since July 1st, adding over $9 billion to Nintendo's market cap.
Pokémon Go is a well-timed-and desperately needed-stroke of luck. In February Nintendo cut its projected profits by more than half, from ¥41.8 billion to ¥17 billion. However after Pokémon Go attracted hundreds of millions of users (passing the number of daily android users for the popular dating app Tinder and the social media app Twitter), 7.5 million downloads already, and $1.6 million in daily revenue, Nintendo's performance may be turning around for the better. While analysts say the app itself is not enough to single-handedly turn the company around, it is sign that Nintendo has finally decided to embrace mobile gaming, which is a new and lucrative gaming market. Nintendo has also announced plans to sell "Pokémon Go Plus", a separate device to interface and complement the mobile app, for $35 to help supplement revenue from the mobile app.
Nintendo has traditionally stayed away from mobile gaming, preferring to stick to its strengths, console/ handheld device gaming, but that strategy has been called into question after it had to reduce its profit projections by more than half, after weak sales of its new Wii U. It recently released "Miitomo", a social app which was the no. 1 app for two weeks after its release in mid-March, and now the with the release of Pokémon Go, it signals a commitment to making mobile games, after refusing to do so for almost a decade.
Nintendo has hit the jackpot with Pokémon Go. While it remains to be seen whether Pokémon Go's success will be fleeting or not, it does show that the future Nintendo may be very different from what it looks like today; Nintendo today is known for its consoles and console games, but it might be the mobile gaming powerhouse of tomorrow.
