Saxo Bank: Pokémania has left Nintendo overvalued

Monday 25 July 2016
Peter Garnry, Head of Equity Strategy at Saxo Bank

Dubai - MENA Herald: The Nintendo stock is just as popular among Saxo Bank’s clients as the game is among Pokémon-enthusiasts. The 110% growth and high volatility makes it an interesting stock for traders, and Nintendo has now surpassed Apple and Facebook as the most traded stock on the SaxoTraderGO platform in the past week.

“As the stock has surged 110% in a very short time investors must really ask themselves if Nintendo can justify such a high valuation. One could be tempted to say that the Nintendo stock finds itself in ‘augmented reality’ just like the Pokémon’s’ in the game” says Peter Garnry, Head of Equity Strategy at Saxo Bank.

“Seen over the past week Nintendo has been the most traded stock on SaxoTraderGO and a lot of clients have benefitted from the rise. However, we believe the stock has reached its peak, and investors should consider taking short positions in order to profit as the stock drops to a lower, more reasonable level” says Garnry,

Peter Garnry reports that the game is seeing an average revenue per daily active user (ARPDAU) of $0.25.
This is $0.05 higher than the previous record ARPDAU of $0.20 posted by King Digital's Candy Crush .

“Even if we assume that Pokemon Go reaches one billion active users and raises ARPDAU to $0.50, it still doesn't justify the current valuation. Nintendo needs to find revenue streams yet to be seen on mobile before the equation adds up. The potential for advertisement placement and similar monetisation is strong but the value of such initiatives is exceedingly uncertain, " says Garnry

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