Nintendo shares closed lower on Thursday as investors struck a note of caution ahead of the release of "Super Mario Run" on Apple's iOS, a game which is seen as risky but crucial for the Japanese company.
"'Super Mario Run's' positive news already priced into the current stock price ... I'm a bit cautious," Eiji Maeda, analyst at SMBC Nikko Securities, told CNBC by phone on Thursday.
Maeda has a price target of 22,000 yen ($186.92) on Nintendo's stock, representing a 20 percent decline from Thursday's close. Year-to-date, Nintendo's share price is up over 64 percent. The gaming giant's stock closed at 27,575 yen Thursday, down 1.43 percent for the session.
"Super Mario Run" is set to be released globally across the world on Thursday and is free to download but costs $9.99 to unlock the full game. It is forecast to earn more than $71 million in worldwide gross revenue during its first month, less than half that achieved by "Pokemon Go" in the same time period, according to SensorTower research.
The release of the game is seen as risky for Nintendo as it is charging a premium price. Most mobile games today are free to download and work on a model of selling items within the game to earn revenues.
Maeda expects that the game will get around 150 million to 200 million downloads between now and the end of March 2017, with around 15 to 20 percent of users paying for the game. The analyst said that this would convert to 30 billion to 40 billion yen of revenues between December and the end of March.
But if "Super Mario Run" fails to hit expectations of users paying, the stock will fall, Maeda said.
"If the pay rate is over our expectation, it's a positive surprise. If it's lower it will be a disappointment for our consensus and stock price," Maeda told CNBC.
Nintendo's entrance to the mobile game market earlier this year has so far been successful. Its social media app "Miitomo" did well, while "Pokemon Go" –developed by Niantic, which Nintendo has a stake in – went viral. "Super Mario Run" was developed by Nintendo and DeNA however, which should help Nintendo see more of the revenue from the game.
Analysts are focusing on the $9.99 price to see if users spend the money, and some feel that with Nintendo's strong brand, the gaming giant will be able to make "Super Mario Run" a success.
"After a long period of having no clearly defined mobile strategy, Nintendo is entering the mobile games market at an opportune time. Right as the market is cluttered by an abundant offering, the Japanese giant enters with a highly-visible franchise. Beyond the success for Nintendo, other publishers will be watching to see if a $10 premium model will work on mobile from here on out," Joost van Dreunen, CEO of SuperData Research, wrote in a note Wednesday.
"The nostalgia factor plays a key role here, as an entire generation of gamers suddenly, and finally, finds itself able to play one of their childhood franchises on their phone, two weeks before the holidays."
Another reason "Super Mario Run" is so crucial for Nintendo is the effect it could have on its console business. If the mobile game does well, it could create a halo effect around the company which will help it when it comes to selling its upcoming console called Nintendo Switch next year. Its recent handheld console the Wii U has been unsuccessful, so the Switch is an important console for Nintendo.
"The console business is more important than the smartphone business for Nintendo," Maeda told CNBC, who said that success for the Switch will be a "catalyst" for the company's stock if it does well next year.