As Nintendo (NTDOY) continues to reap spectacular gains from the success of its Pokemon Go mobile game, new entrants may soon be jumping in the world of so-called "augmented reality."
The game, which employs GPS tracking technology with interplay featuring Nintendo's highly popular Pokemon intellectual property, or IP, opens the door to unprecedented opportunities among rivals.
"People are realizing that this is more than a game," short-seller Andrew Left, the founder of Citron Research, said in a Monday phone interview with Real Money. "Augmented reality is not a rumor anymore -- it's a way to drive community and a way to drive commerce."
Left said the new technology exposes how people have become "bored" with their smartphones, putting those companies with a foothold on mobile engagement -- namely Facebook (FB - Get Report) and Twitter (TWTR - Get Report) -- at risk. (Facebook and Twitter stock are holdings in Jim Cramer's Action Alerts PLUS charitable trust.)
"Here's what I believe: People are addicted to their phones, and that's not changing," Left said. "Facebook has been the beneficiary of our obsession with our phones," he said, noting that Facebook's mobile-ad-centric business model could be in jeopardy now that people are becoming more wary of sharing data in public, especially as adolescents are learning in school the dangers of social media, and how to "treat your name like a brand."
While Left is bearish on Facebook stock, he says now is not the best time to go short. He recommends waiting to see a decline in Facebook stock that could prompt investors to reassess their portfolios.
New entrants in augmented reality are likely to consider Zynga (ZNGA - Get Report) , the maker of social-media games such as FarmVille and Words With Friends, as well as rivals with valuable portfolios of already popular games in their arsenal, Michael Hickey, an analyst with Benchmark, said in a Monday phone interview.
"Pokemon Go really opens up a new genre where top publishers are trying to get a share," he said, noting Electronic Arts (EA - Get Report) , Activision Blizzard (ATVI - Get Report) and privately held gaming company Blue Mobile are among the most likely entrants to ride the wave that's helped lift Nintendo share prices about 108% over the past month.
"The average engagement is more than 45 minutes a day," Hickey said of Pokemon Go, adding that Facebook's mobile app commands more of its users' time, but the new "outdoor approach" is beginning to drive longer playing sessions as players roam their neighborhoods to collect Pokemon creatures.
"There will be copycat games, for sure, but this is going to be a Pokemon story for a long time," Hickey said. "Just wait 'til the game hits Japan. If this IP means anything to anyone, it'll be there."
Nintendo's American shares closed Monday up 12%.
Editor's Note: This article was originally published at 4:40 p.m. EDT on Real Money on July 18.