Pokémon Go mania is not yet over yet - long Nintendo (target 45)

Nintendo shares could add a further 60% from current levels if the speculative mania continues.

  • Augmented Reality game that allows players to interact with real-world surroundings via their smartphone with a theme built around the Pokémon brand

  • Released 6th June 2016 in Asia, the game has seen more users downloads than dating app Tinder, and it's popularity is reflected in Google             search traffic eclipsing that of keyword searches for "p*rn"
  • Germany became the first European country to have access last week, with the subsequent UK launch having been delayed due to server outages following download numbers
  • Players across Europe and the US have been unable to access the game following overwhelming demand

  • As the parent company, Nintendo             reportedly has a 30% stake in the development company, which was spun off from Google             in 2015

  • Disappointing Wii sales and a switch to mobile gaming amongst casual gamers have hurt Nintendo             , but with PG             they now have an opportunity to reclaim this business by establishing a share of the mobile market by leveraging their globally-recognised Pokémon brand

  • One-third of the game’s total revenues are derived from app store downloads (rest in-game)
  • Making $1.6m a day from iPhone users in the US alone
  • Extrapolating this figure, total revenues from US iPhone users (including the in-game majority) could be worth around $5m per day. Given continued growth in popularity and new launches in other countries, a conservative estimate could approximate total revenues globally, across all mobile platforms, in excess of $10m per day ($3.7bn per year).
  • Having added $15bn in market cap since the 86% rally in the share price, it looks as though speculators are getting ahead of fundamentals. However, King games' 'Candy Crush Saga' raised $7bn in their IPO and demonstrated the potential for monetising spin-offs and sequels
  • Overseas revenues ( esp             . USD) are a boon for Japanese Nintendo             who report earnings in Yen

Whilst I am fascinated by manias but very rarely participate (on the upside at least), I believe that active and aggressive traders could stand to profit from buying in to the parabolic move in Nintendo             . With a stop towards the prior day's low, or Fibonacci retracement level in the event of a short-lived pullback on a daily interval , upside momentum remains targeting levels of 37 initially and eventually 45 if this move is to be sustained. I would not rule out a 61.8% retracement of the 2007 high (52.85) or even a return to 78.50, however the shares would be grossly overvalued and truly represent mania, presenting a tremendous short opportunity.
Comment: CORRECTION: Launch date was 6th JULY, not 6th June.

Additionally, Pokémon Go is not yet launched in JAPAN, the initial launch was in the US followed by Europe last week. China has arguably the greatest potential for Nintendo and they are likely to join the likes of Japan and South Korea in gaining access to the app soon.

Details of country-by-country availability can be found here: http://www.polygon.com/2016/7/15/12196050/is-pokemon-go-out
Trade active: Nintendo ADR $NTDOY trading 11% higher. Domestic listing didn't trade today due to exchange holiday. Expect it to open up tomorrow.
Trade closed: stop reached: http://www.bloomberg.com/news/articles/2016-08-01/nintendo-shares-drop-as-pokemon-go-slips-in-japan-rankings
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