SEOUL, KOREA - The share price of Nexon, Korea's No. 1 game developer and publisher, has plunged more than 20 percent in the Tokyo Stock Exchange on November 11 to 877 yen from 1,117 yen.

 

Accordingly its market capitalization of close to 1 trillion won has evaporated in one trading day. It was largely because analysts in major securities houses downgraded the stock's recommendation rating questioning the company's future growth potential. In the short run, the company's fourth-quarter performance is expected to be lower than earlier estimates.

 

A Nexon official said, "The fact that some user indexes for the Dungeon & Fighter game in China have declined brought down our stock price. But other indexes including the average revenue per paying user are still on the rise."

 

On the 12th, Nexon's share price regained slightly to 890 yen, up 1.48 percent from the previous day. But its market cap remained at 390.9 billion yen, 99.7 billion yen lower than the November 8 level of 490.6 billion yen.

 

Earlier, J.P. Morgan lowered its recommendation on Nexon to "neutral" from "overweight," with the target price 19 percent lower than before. Deutsche Bank also downgraded the stock to "neutral" from "buy," while other Japanese securities firms such as SMBC Nikko Securities following suit.