December 20, 2016 / 10:10 AM / 7 months ago

Nintendo's ups and downs reflect puzzle for market

3 Min Read

Nintendo Creative Fellow Shigeru Miyamoto stands next to the Super Mario character during an Apple media event in San Francisco, California, U.S. September 7, 2016.Beck Diefenbach

HONG KONG (Reuters Breakingviews) - Nintendo is a puzzle for the market. Disappointment over "Super Mario Run", an important push into mobile gaming, has sent the Japanese company's shares on a round-trip. Making a successful leap to this new on-the-move platform is critical for Nintendo - but investors are struggling to decode what they have seen so far.

Nintendo has taken years to come around to mobile gaming. The move to put Mario, the dungaree-clad plumber, on mobile handsets showed the console specialist was finally serious about bringing top characters to a wider audience. That built on the runaway success of Pokemon GO, jointly developed by two Nintendo-backed companies, which launched in July.

Business has been brisk since the game’s launch on Dec. 15: Sensor Tower says Mario racked up a record-breaking 25 million-plus downloads in the first four days. But some players dislike that Nintendo charges nothing at first, and then a flat $9.99. That could both deter casual users and not make the most of serious fans, who are often willing to spend a lot more on "in-app" purchases. There has also been grumbling the game eats up too much data, which is not great for a commuter-focused title.

As of early afternoon on Tuesday, Nintendo stock stood at 24,925 yen, down nearly 18 percent over six days. That values the group at roughly $25 billion, excluding treasury shares, or a fairly robust 35 times expected earnings for the year to March 2018. While the stock is still up 40 percent post-Pokemon, the pullback means it is flat since Sept. 7 when it announced the decision to launch Mario, against a 15 percent rise in the Topix index.

Nintendo is a mercurial stock: it has moved more than 5 percent on 17 days in the last six months, Datastream shows. Sony has moved that much three times during the same period. That volatility reflects both the huge potential promise of bringing one of the world's greatest videogame outfits to a connected world, and the lingering fear that Nintendo will somehow screw it up, perhaps through badly made or badly priced games. Nintendo has not convincingly mastered mobile yet.

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