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Wednesday, August 10, 2016

How Do You Invest In Pokemon Go / Niantic / Nintendo?

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Ever since the amazing popularity of Pokémon Go's initial release, many older players (now of investing age) are looking to get a piece of the pie financially. However, investing in the game is not as simple as it sounds, especially with the complicated financial structure that surrounds the game. Disclaimer: This post is not meant to be used as investment advice. Do your own due diligence before investing in the stock market.

Introduction

Ever since the amazing popularity of Pokémon Go's initial release, many older players (now of investing age) are looking to get a piece of the financial pie. However, investing in the game is not as simple as it sounds, especially with the complicated financial structure that surrounds the game.

Disclaimer: This post is not meant to be used as investment advice. Do your own due diligence before investing in the stock market.

Direct Ownership of Pokémon Go

At its core, Pokémon Go is a collaboration between The Pokémon Company and Niantic Labs, both of which are private companies (AKA you have to be very wealthy to invest directly in them).

The Pokémon Company, Nintendo and Google cumulatively invested $30 million into Niantic, Inc. and thus each may own a portion of Niantic, Inc.

The Pokémon Company is owned by Nintendo Co. Ltd., GAME FREAK Inc., and Creatures, Inc.

Nintendo may also own portions of GAME FREAK and Creatures. As a rough estimate, Nintendo owns about 13% of Pokémon Go according to Macquarie Securities analyst David Gibson.

Additionally, Nintendo is a Japanese exchange traded ONLY stock. This means that to invest in the company, you have to buy an ADR (American Depositary Receipt) if you are from America. This allows people ownership of the underlying Japanese stock, but the price of this equity is a step removed from the actual company stock, which trades at different hours.

Again, please do your own research before buying, especially since the ADR trades on the OTC Market.

Rights To Profits

As a mobile application, Niantic receives 70% of the in-app purchases, and 30% goes to Apple if the purchase was made on an iPhone. Google takes the 30% cut if you buy it on an Android platform.

Other Beneficiaries

Additionally, beneficiaries to Pokémon Go include complimentary companies such as:

Conclusions

In a nutshell, all the "major" beneficiaries of Pokémon Go will likely see a low impact to their earnings as a result of the fact that they are already massive companies (Apple, Google, McDonald's, etc.). 

Meanwhile, although Nintendo is considerably smaller than the ones above, they only own a small portion of the application itself. Some investors speculate that this may just be the beginning of Nintendo's foray into the mobile scene where the company could establish itself as a front runner, but it is uncertain if they can duplicate the success of Pokémon Go with the rest of their titles.

What do you think? Interested in some of the companies listed above or have another beneficiary that isn't listed? Comment below!



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