Shares in Nintendo (TSE:7974, Financial) have tumbled by almost 18% after the company issued a statement indicating the wild success of Pokémon Go would have virtually no impact on earnings.
Since its release at the start of July, Pokémon Go has rapidly exploded into one of the most popular smartphone games of all time. The augmented reality app has already been downloaded more than 50 million times on Google Play, and is now said to boast more active users than Twitter.
Thanks to a spike in activity and broad media coverage, shares in games publisher Nintendo have since enjoyed a 115-point surge over the last two weeks.
But that surge came to an abrupt halt on Friday after the company issued a statement aiming to clarify that Nintendo cannot claim sole ownership over Pokémon GO.
Despite the long-running association between Nintendo and Pokémon GO, the statement confirmed the wildly popular game is actually the property of San Francisco-based software firm Niantic.
Nintendo does own full rights to the Pokémon brand via its affiliate, The Pokémon Company. The two firms actually hired former Google start-up Niantic Labs to develop Pokémon GO on their behalf in September 2015.
One month later, Niantic was spun off to become its own independent entity. Google retained an interest in the business – while The Pokémon Company took on a 32% stake in Niantic.
As a result of that shared ownership, The Pokémon Company is set to receive a licensing fee and sizable compensation for collaboration in the development and operations of the lucrative app. Yet, because The Pokémon Company is accounted for based upon equity, its income isn’t necessarily visible as part of  Nintendo's wider, consolidated earnings.
“Taking the current situation into consideration, the company is not modifying the consolidated financial forecast for now,” the statement said.
Nintendo went on to mention investors could expect the company to benefit from the impending sales of Pokémon GO Plus – a new accessory designed to alert game players when a Pokémon is nearby, allowing users to play without constantly checking their phones.
That being said, the company added the anticipated sales boost from the device had already been factored into Nintendo’s annual financial forecast.
In response to Friday’s clarification announcement, shares in Nintendo dropped 17.7% on Monday – effectively erasing $6.7 billion in market value.
The drop represents Nintendo’s biggest decline since October 1990, and swiftly hit the maximum one-day move permitted at the Tokyo Stock Exchange.
Nintendo is scheduled to report its first quarter earnings on Wednesday.
