6 July 2016: Pokemon Go sends Nintendo shares soaring
Pokemon Go launched in the US, Australia and New Zealand and became a sensation overnight, with players wandering streets staring at phones. Nintendo's share price roughly doubled in under two weeks. Then Nintendo pointed out that the game was made by Niantic and that its own profit impact would be limited. The stock promptly fell hard. Investors had bought the headline before reading the ownership structure.
The lesson: Before buying the hype, check who actually earns the money from the hot new thing.
What it meant for investors
$1,000 in Nintendo at the start of 2018 → $2,125 today, vs $2,519 in the S&P 500.
We start the clock at the start of 2018, the first year in our price data after the event. That is 2.1 times the money, but $394 less than a plain index fund made over the same years.
What Nintendo teaches: Hit-driven businesses swing between genius and doom with each product; extrapolating the latest console's sales is a forecast about creativity, not about earnings.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $12.00 | $7,083 | $3,301 |
| 2018 | $40.00 | $2,125 | $2,519 |
| 2020 | $42.00 | $2,024 | $2,092 |
green = beat the S&P 500 · red = lost money
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