By now you have probably heard of the massively popular app “Pokemon Go”. What you may not have known is that the app was largely created by a company named Niantic, not Nintendo. In fact, it was rumored and even confirmed by Nintendo that the game would barely affect their profits…

The Start

Believe it or not, I used to know nothing about the stock market (see My First Experience with Investing). But there was one thing I did know, smartphones and how popular apps can become through social media and teenagers. I mean, I am still in high school I should know these things right?

So even though I was not 18 yet and had never bought a stock before, I decided to buy stocks of Nintendo. I had been doing a little bit of research on the company, but I already knew about Mario and Zelda, what else did I need to know?

The catalyst that cause me to buy Nintendo was two news stories in a span of a few weeks. First, there was news that Nintendo would be developing their own console, the NX. Second, it was confirmed that in the coming future Nintendo would be developing mobile apps, one of them being “Pokemon Go”.

I had been watching the stock for a while, trying to see if it would drop just a little bit so I could save a few bucks (cheap right?). This was all the way back in March, so the stock was very stagnant. Other than the occasional news story, Nintendo was doing nothing at all. The stock was a perfect representation of that. I was about to go on spring break, and decided to make a decision on whether or not to buy it. I said, “what the &%$#, let’s do it.” So I bought the stock through my dad’s account, 25 shares worth $454 (about $18.15 per share). This was about half of thee money in my savings account, so this was pretty much my first big financial decision. Well it worked. 🙂

The Rise of Nintendo

For about two months, nothing happened. Nintendo’s stock was barely being traded, and barely differed in price. I was starting to get anxious, wondering if I had made the wrong choice. But I knew in my heart why I had bought the stock, and those catalysts had not yet come into play. After another week or so, Nintendo released their first app “Miitomo”. Honestly, the game was really stupid. But just because it was created by Nintendo, it was quickly on top of the app store charts. Surprisingly, the stock still didn’t move, and stayed around the $19 range.

Then Nintendo announced the next app the would release would be “Pokemon Go”. This was around the beginning of May… Nothing happened to the stock for the next two months, and once again I was getting pretty anxious. Then came the day “Pokemon Go” was released.

I remember just being at home when all the sudden my phone exploded with text messages all saying around the same thing, “Pokemon Go is in the app store!” I quickly drove to my local high school (because I have data usage internet and can’t download things at home, long story that I should probably post about in the near future), and downloaded the game. That day I spent with my friends running around catching Pokemon, while the stock when up a measly $1.

Investors had no idea about the potential of the app. I had went home that day searching Nasdaq and other financial websites for articles on the game’s release. There was absolutely NOTHING. The only mistake I made was not putting the rest of my money into the stock, because I knew it was going to be huge. I had just first-hand witnessed the craze of just my small little town running around, spending money on the app. The next day Nintendo went up $2, and then just skyrocketed. Over about two weeks the stock went up from $20 to its high of $38. The stock almost DOUBLED, just off of one app….

The second mistake I made was not selling the stock at $38. I knew there was not much room left for it to grow, and was even starting to get tired of the craze. That day I emailed my uncle (who is a day trader), and asked him for his advice. I was contemplating on selling that day when the news about Nintendo making little profit from the game came it. Nintendo’s stock started to drop. I was hoping that the stock would rebound so I could sell it, but it didn’t. I finally had to cut my loses (or profit?) by selling it at $26.15. That’s almost a 50% drop from if I would have sold it at $38. But then you have to remember, I bought it at $18.15. I still managed to rake in a 46% profit on the first stock I bought, crazy right?

The Future of Nintendo

While I think the “Pokemon Go” craze is over, I do think that Nintendo can still grow. It has released any Mario or Zelda apps, and still has the NX to release. However, I think that the stock is highly overvalued right now at around $28 a share. I think in the coming months, the momentum of the stock will fade and it will return back around the $22 range. When that happens, I guarantee you I will be buying shares of Nintendo once again.

 

Comment below if you or someone you know bought shares of Nintendo before the “Pokemon Go” craze happened!

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