Consumer Electronics

Has the Pokémon Go Stock Craze Returned to the 1990s?

Jon C. Ogg

Niantic Labs is tied to both Nintendo and Alphabet Inc. (NASDAQ: GOOGL). It was effective spun out of Alphabet in 2015, but Alphabet has a financial stake in the augmented reality outfit. As with McDonald’s, or even more so, the former Google (Alphabet) has a market cap north of $500 billion. With shares at $753.07, its 52-week range is $593.09 to $810.35. Inc. (NASDAQ: AMZN) may have a great cloud business, but one can never forget that its retail presence is an all-eating machine versus other retailers. And if you log on to Amazon under Pokémon items for sale without specifying what category, you get a whopping 327,563 results. Amazon’s market cap is nearing $350 billion, and with shares at $738.75, its 52-week range is $451.00 to $757.34.

Another beneficiary would be the cellphone carriers, but likely all of them equally with data plans having to be expanded and with the companies selling more peripherals in their physical stores. That means Verizon, AT&T, T-Mobile US and Sprint. With people using GPS and using other issues for the networks, people who have limited or capped data plans, or shared plans, might tip over the limit. It was reportedly only eating 10 megabytes per hour, but that may be a generality. T-Mobile US Inc. (NASDAQ: TMUS) has announced an increase to unlimited Pokémon Go data as a gimmick to win new subscribers.

If you wanted to see more research for Nintendo, on July 12 Jefferies maintained its Buy rating on Nintendo shares in Japan. The firm’s take is that Pokémon Go is just a tip of the IP iceberg. Its key takeaway was a 30,000 yen price target, as follows:

It is not about Pokémon Go. The reason we like Nintendo and remain Buyers is because its stock at ¥14K was valuing it at EV of c.$5b (below that of King and Supercell acquisitions). The value of its IP can only be unlocked on mobile and, from this month, it has just started that journey with Pokémon Go. There is lot more to come, which we believe will further validate our belief that Nintendo’s game development prowess is unmatched.

Again, this is not meant to say that the Pokémon Go stocks have no more legs. Chances are high that other companies, and some highly speculative companies at that, will make Pokémon announcements of sorts ahead. If history is a barometer, those shares may benefit from this. Just remember one warning about stock crazes: nothing lasts forever, and when the speculators start leaving it often gets real ugly.