Last Friday the stock Nintendo rose 11% after one of its smartphone game Pokemon Go was ranked no.1 of the apps download chart in the US, Australia and New Zealand. Furthermore, this morning the stock has rallied another 25% and hit daily limit up in Japan. In a nutshell, Pokemon Go is an augmented reality smartphone game and players would ‘capture monsters’ using their smartphone cameras in the real world locations. When investors might be thinking that the Nintendo share price has been in a rally due to short squeeze, OTAS has pointed out that there are some real investors buying the company as the short sell levels of the stock is only 1 day to cover. And in fact we also see that all the Japanese gaming names have a low short interest ratio.
Investors were worried about the results and shorted the stock ahead of the results in April 2016. However with the successful launch of their first mobile app Miitomo in March, the % of FFS on loan of Nintendo has remained to be on low level.
Generally, the short interest of the Japanese gaming industry is relatively low compare to the stocks in Japan Top 225:
Stocks in the Japanese entertainment field
Japan Top 225 stocks:
Volume of Nintendo has spiked up last Friday and today with close to no short covering as shown above. Investors are not hesitant despite Yen coming strong (around 100.6) and been chasing the stock.
The Nintendo stock performance has been positive so far this year, as well as being the out-performer compare to its region and industry. With the success of Pokemon Go, plus a strong pipeline with lots of other popular characters, the company see a promising outlook in the near term.