Technology

Can Pokemon Go Really Help Boost Apple Shares by 50%?

Jon C. Ogg

Published: July 20, 2016 1:10 pm

Last Updated: January 13, 2020 5:30 am

Apple Inc. (NASDAQ: AAPL) has blown through all sorts of global milestones. On top of having been most investors’ favorite stock for years, it reached the largest market cap in the world and has amassed more cash than over half of the world’s nations. So what would happen if investors could figure out that Apple was set to win handily from the current Pokémon Go craze? And what if it was backed up by a Wall Street research report?

Needham’s Laura Martin now has a $150 price target on Apple. Her new report projects that Pokémon Go could be worth $3 billion for Apple, driving up earnings and revenues due to all the iPhone users so deeply entrenched into Pokémon Go craze.

24/7 Wall St. would warn readers that just because an analyst is positive does not mean investors should just blindly follow their calls. We even pointed out the massive gains seen in Pokémon-related stocks and asked if this was a return to some of the same craze seen in the 1990s.

Martin sees $3 billion in revenues coming to Apple over the next 12 months to 24 months. She also sees these revenues as being higher margin revenues since they are from the app store and being used by higher worth customers. She projected that Apple may be keeping 30% of the Pokémon Go revenues, which are happening via the iOS devices.

Martin further noted that Pokémon Go had 21 million active users in the United States at the start of this week, citing outside app measuring sources. While that is spread out on all devices (including Android), the Pokémon Go app is believed to be 14 million iOS users of the total 21 million.

What also stood out in the Needham call is that Apple was called the top global distribution platform for mobile content winners. That is in general, and not just for Pokémon Go.

As a reminder, Pokémon Go is a joint venture of the Pokémon Company, via Nintendo and Niantic. Alphabet Inc. (NASDAQ: GOOGL) spun Niantic out late in 2015, and Alphabet and Nintendo both own stakes in Niantic.

An interesting issue here is that the different levels of Pokémon Go may be what is helping Apple. The game itself is free, but users are paying real money for the extras. Even if that real money is just a few cents at a time for Apple, when you start multiplying it by millions of users and by the number of days, weeks and months, it can add up to serious money.

That upside of $3 billion in revenue projection, and the higher margins that come with it, of course imply that Pokémon Go will still be played weeks and months from now — which remains to be seen. Many game players and app users have shorter attention spans and move on to the next new thing rapidly. Whether that will be true for Pokémon Go remains to be seen.

Apple shares have hardly reacted to the upside, perhaps because it takes so much to move the needle for Apple. Its market cap is almost $550 billion, but its $99.80 share price at 1:00 pm Eastern Time was actually down seven cents on the day so far. Apple’s 52-week trading range is $89.47 to $127.09. and its consensus analyst price target is now $122.78.