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Nintendo Shares Drop 18% After It Reminds Investors It Did Not Develop Pokémon Go

doubled since the release of the game on July 6, with a market capitalization of 4.5 trillion yen (US$42.5 billion) as of last Tuesday. Monday's stock price drop reduced the company's market value by $6.7 billion.

The company's market value stood at 109 times the company's own projected net income. It must report an annual net income of about 200 billion yen ($1.90 billion) to justify that value. The company projects a net income of 35 billion yen. Nintendo will report first-quarter results on Wednesday. Nintendo's Friday statement noted that the company was not "modifying [its] consolidated financial forecast for now."

The 18-percent drop is the most that share prices are allowed to drop in one day on the Tokyo Stock Exchange. It is the company's biggest drop in 26 years. Nintendo shares still hold a price-earning ratio of 80. On July 5, before Pokémon Go's release, Nintendo stock was valued at 14,490 yen (US$136.59). As of last Tuesday, on July 19, it was valued at 31,770 yen (US$299.49). The company's stock price is currently valued at 23,220 yen (US$218.46).

reports that it will offer sponsored content in the Pokémon Go app in Japan.

While Nintendo did not directly develop the Pokémon Go game, the company, alongside Creatures being privately held. Nintendo is producing the "Pokémon GO Plus" peripheral device, which is scheduled for release in Japan near the end of July. The company said that it has already taken the Pokémon GO app release and the "Pokémon GO Plus" release into when it made its financial forecasts in April regarding the financial year that will end on March 31, 2017.

According to Macquarie Securities analyst David Gibson, Nintendo stands to receive roughly 13 percent of earnings from Pokémon Go.

The Pokémon GO app launched in select countries on July 6 and has since launched in more than 35 countries, including in Japan last week.

Nintendo is launched its first smartphone game, Miitomo, in March and it has reached more than 10 million s worldwide.

Thanks to Stuart Smith for the news tip

Sources: Takashi Amano)

Update: Typo fixed. Thanks, Proz512