Nintendo Co., Ltd (TYO:7974) shares plunged on Tuesday, partially recovered, and then tumbled again today as Wall Street came back down to earth and the Pokemon Go euphoria begins to dissipate. The Japanese game and console maker has earned at least one downgrade this week, and investors are starting to realize that any impact on Nintendo from the game’s huge success will be limited.

Pokemon Go Nintendo
Image Credit: Nintendo

Meanwhile another firm has suggested that an unexpected company will benefit from the Pokemon Go craze: Apple.

Nintendo’s share rise unexplainable

In a report dated July 19, UBS analyst Sumito Takeda said the surge in Nintendo’s stock price is difficult to explain when looking at the company’s fundamentals. He has a Sell rating and ¥15,000 price target on the Japanese company. As other analysts have noted, he said earnings related to jointly-developed mobile apps such as Pokemon Go “basically equate to equity-method profits from The Pokemon Company,” of which Nintendo holds a 32% stake.

He believes that at some point, however, the company could see direct earnings from Pokemon Go Plus toys. But looking at the fundamentals, even when factoring in “substantial billing revenue (on the Niantic side) and reasonable volumes for Nintendo Plus,” he thinks it’s difficult to explain Nintendo’s soaring market capitalization based on earnings data.

The analyst spoke with investors who believe Nintendo will be able to see that Pokemon Go developer Niantic was able to create a hugely popular game using Nintendo intellectual property and thus decide to focus on software and exit hardware. However, he believes the Japanese company should continue to focus on hardware and that it is the key to its long-term success. He adds that the success of Pokemon Go should be seen as different from Nintendo’s historical success, which lay in redefining the way video games are played through new hardware.

Nintendo downgraded by Deutsche Bank

Earlier this week, Deutsche Bank analyst Han Joon Kim downgraded Nintendo to Hold, noting that the market sent its market cap up to $27 billion, putting it on the level with Electronic Arts and Activision Blizzard, which each hold 5% of the video game market. By comparison, Nintendo’s share is only 2%, and the analyst believes the sudden surge in the price means that the market expects it to regain share to 5% of the global market. The analyst does believe it’s possible for Nintendo to get back to a 5% share with the rumored NX console, which could feature virtual reality, but sees no room for upside beyond that.

Japan-listed Nintendo shares plunged 12.61% to ¥27,765, while ADR shares of the company tumbled by as much as 6.86% to $33.39 on Wednesday.

Apple an unlikely beneficiary of Pokemon Go: Needham

While pretty much all of Wall Street’s attention relating to Pokemon Go has been on Nintendo (even though it did not actually develop the game, although it owns the intellectual property), Needham analyst Laura Martin is focusing on Apple. She actually believes Pokemon Go could generate $3 billion in “incremental high-margin revenue” from the game over the next one to two years. She noted that Candy Crush generated more than $1 billion per year in 2013 and 2014. Further, she said Pokemon Go‘s ratio of paid to total users is ten times higher than Candy Crush‘s. She estimates that Apple keeps 30% of the revenue spent on Pokemon Go on iOS devices, which could point to upside for the iPhone maker’s earnings and also “valuable options on future hits.”

Martin points to data from Sensor Tower which showed that Pokemon Go was generating $1.6 million in U.S. revenues per day on iOS devices as of six days after the game launched. As of July 11, the game had been downloaded on 10 million iOS devices. This implies that players spend, on average, 16 cents per day, with Apple keeping 5 cents per player each day.