After investors pushed up Nintendo Co. shares with a fervor only matched by gamers chasing Pikachu, traders are now locking horns over how much the high-flying stock is worth.

Bears have boosted short interest in Nintendo to its highest in five months after the stock doubled in just over a week. The other camp includes Yasuo Sakuma of Bayview Asset Management Co., who says the rally has long-term potential as the mobile app “Pokemon Go” is rolled out to more countries and the game-maker expands its location-mapping technology to the rest of its lineup, including “Super Mario Brothers” and “The Legend of Zelda.”

“The way the stock has risen is abnormal,” says Sakuma, Tokyo-based chief investment officer for the $2.6 billion fund manager. “For now, the stock needs to cool down, but there isn’t enough evidence to say that the ¥4 trillion in market cap for the company is too high.”

Nintendo added $18 billion to its market capitalization after releasing “Pokemon Go” on July 6, with the mobile game becoming an instant hit in countries including the U.S., U.K. and Australia. The total value of trading in Nintendo was higher than any other company in Tokyo Stock Exchange history on Tuesday, when $6.6 billion worth of shares changed hands — more than the equity turnover for exchanges in Hong Kong, Australia, Germany and Switzerland that day. On Wednesday, the stock tumbled 13 percent, the most in five years, before resuming gains on Thursday.

“It’s been nuts,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd. “The hype over the game is huge. There’s been nothing like this since … I can’t remember really.”

The surge in shares is hard to justify with fundamentals, even when factoring in potentially substantial billing revenue from in-app purchases, said Sumito Takeda, an analyst at UBS Group AG. Given that Nintendo effectively owns less than a third of the game — with Niantic Inc. holding the rest — profits are likely to grow by just 5 percent for Nintendo, said Deutsche Bank AG.

“It is possible that Nintendo is on the frontier of pioneering new trends in video gaming,” Deutsche Bank analyst Han Joon Kim, who downgraded the stock to hold from buy, wrote in a report on Monday. “However, we would prefer to see a strong indication of such before considering ascribing a valuation premium to the stock.”

Even after Nintendo shares dropped on Wednesday, the shares trade at more than 100 times projected earnings, the seventh most expensive stock among almost 2,000 companies on the Topix. Technical indicators also flash sell signals, with the 14-day relative strength index on the company surging to as high as 89 on Tuesday, above the 70 level traders say show shares have risen too far, too fast.

Investors have also been attracted to shares related to Nintendo. First Baking Co., a maker of Pokemon bread, soared by the most in 6½ years Tuesday, only to lose 6.3 percent Wednesday. McDonald’s Holdings Co. (Japan) jumped 16 percent over the past two sessions amid reports that it is sponsoring the game and its burger restaurants will become a key location for Pokemon chasers. Late on Wednesday it confirmed it will be involved in the rollout.

Speculative buying in companies only loosely related to Pokemon will cease, while others with more substantial links, like McDonald’s Japan, will continue to benefit from the “Pokemon Go” craze, said Tomoichiro Kubota, a senior analyst at Matsui Securities Co. in Tokyo,

What is more, the pace of Nintendo’s rally is not a bad thing, as many investors have been caught off guard and will buy when the stock drops, Kubota says.

“I think we’re seeing some completely expected profit-taking during a rising trend,” he said. “Once we see revenue from the game in the U.S., or more releases in currently unreleased countries such as Japan, this round of profit-taking should stop.”

Ben Le Brun, a Sydney-based analyst at OptionsXpress Australia Pty Ltd., says investors selling Nintendo short are taking a huge risk. About 1.7 percent of the game-maker’s free-float stock was held short on Monday, near its highest since Feb. 17, according to Markit Securities Finance data compiled by Bloomberg.

“When you see videos of people running in Central Park all trying to catch a rare Pokemon, it shows how it’s captured the imagination of the general public,” Le Brun said. “It’s claimed a new rung on the pop culture ladder. So you’d be very game to short it.”

Bayview’s Sakuma says Nintendo’s strength lies in the potential for growth in the technology behind “Pokemon Go,” and the company is likely to diversify further away from hardware. Theme park tie-ups are possibilities, he said.

“The company now has the power to change sentiment throughout the whole market. This is something we see maybe once a decade, at most,” Sakuma said. “The potential for the game is tremendous.”

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