What are the side effects of playing too much 'Pokemon Go'?
Pokemon GO: Nintendo shares surge to double market cap, but profit avenues remain unclear.REUTERS/Sam Mircovich/Illustration

Pokémon GO, the GPS-enabled augmented reality (AR) mobile game based on virtual characters called Pocket Monsters (Pokemon), is turning around its maker's fortune. Its growing captivity of gamers is now spreading to stock trading investors on the Japanese bourse.

Since the world's largest video gaming company Nintendo Co. launched Pokémon GO on July 6, the company's shares have gained more than 100 percent. On Tuesday, it shot up 14.4 percent at ¥31,770 (Yen) or $299, helping the over 125-year old consumer electronic and software firm double its market cap to 4.5 trillion Yen or $42.5 billion.

"I've never seen the trend of such a big company's shares changing so quickly in such a short period of time," a senior strategist at Okasan Securities, Takashi Oba, told Reuters in Tokyo.

Nintendo shares have ruled the Tokyo Stock Exchange's main index by accounting to nearly 25 percent of all trading. Turnover in the company's shares broke its own record set on Friday to touch ¥703.6 billion or $6.6 billion (from ¥476 billion).

A fund manager of a Japanese asset management company said that the big gains on the stock exchanges were justified. He estimated that Nintendo trading at 30 times its profit is based on the expectations that the sales from Pokémon GO and related business could bolster net profits by ¥50 billion or $471 million.

Just over a fortnight, Nintendo's shares have emerged as the marquee virtual-reality AR-indexed stock, the fund manager told Reuters.

However, Marketwatch in a note on Monday warned that the craze over Pokémon Go need not mean much to Nintendo shareholders. Nintendo gets royalties for Pokémon titles, "but surprisingly little direct profit," CLSA analyst Jay Defibaugh wrote. He added, "The economic benefit to Nintendo from Pokémon Go is rather unclear."

Citing observations from Macquarie Research analyst David Gibson, the news website added that Nintendo has a stake of about 13 percent in Pokémon GO and has a potential for a 12 percent upside on its current valuation if the game earns $4 billion in revenues.

Pokémon GO is a free to play app downloaded on the mobile phones; its earnings, therefore, are dependent on the sale of PokéCoins, a currency that enables gamers to catch and hatch Pokémon. The coins are sold for 99 cents to $99.99.

Reuters noted that the growing rage with Pokémon GO could also breathe a new life into Nintendo's other legendary characters like Zelda, Super Mario and others. With virtual reality, long forgotten fictional characters could soon become money spinning sci-fi super heroes again.

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