Shares of Japanese company Nintendo have more than doubled over the past seven trading days. The dramatic rise comes on the heels of its launch of Pokémon Go in the United States.
The wild success of the mobile game, which is now available in 35 countries, has prompted investors to buy up shares of the consumer electronics and software company. On Friday, trading activity in shares of Nintendo accounted for a quarter of all trading on the Tokyo Stock Exchange main board.
The surge in market capitalization has caught investors by surprise, with some wondering if the run-up is justified.
At least one expert sees a tremendous opportunity to harvest profits from the Pokemon franchise. To Gerhard Fasol, CEO of Eurotechnology Japan, the true risk lies in Nintendo’s ability to capitalize on the intellectual property rights of its famous characters.
Others would approach buying shares of the company with caution. Neil Wilson, an analyst with ETX Capital, believes the shares are in bubble territory and could be in for a nasty fall on the first sign of weakness.
There is also a concern that other mobile gaming companies will duplicate Nintendo’s success in the augmented-reality segment, making it difficult for the company to meet frothy expectations.
The last time profits in Nintendo soared, it was on the back of the company’s Wii console. Its success lasted for a few years, but was eventually quelled by competitors Sony and Microsoft.