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Investors Flee Nintendo Stock as Wii U Fails to Impress

Investors have reacted strongly to news coming out of this year's E3 conference in Los Angeles. While all eyes have been on announcements from big hardware manufacturers like Microsoft and Sony, Nintendo (NTDOY) made the biggest waves at the event by being the first to reveal its next generation home console. Dubbed the Wii U, the machine is capable of high definition graphics and is fully backwards-compatible with the Wii console. In addition to the familiar motion input, the Wii U controller also features a big, 5-inch screen that relays action from the telly back to the player. According to Nintendo, players can even use the handheld screen as a standalone device, while watching regular TV on the big screen. It is unclear whether the controller needs to always be within range of the Wii console, or if it can compete with the 3DS as a truly portable game system.

Sony's PSV handheld will similarly be able to interact with console games on the PS3. Similarly, Apple's iPad already includes gaming functionality and may soon be fully interactive with the TV.

Reviews from gamers have been mixed, with many apparently willing to give Nintendo the benefit of the doubt, but investors have not reacted kindly to the new console reveal. At the start of trading on Wednesday, Nintendo stock gapped down strongly to close 6.8% lower for the day, bringing it to a new multi-year low. Analysts cite uncertainty about Nintendo's new strategy, wondering if gamers will be enticed by the tablet-like controller. A lack of specific launch games at the E3 event also worried investors, still cautious from the botched 3DS launch this year. Further weighing on the stock is the fact that Nintendo gave no sales figures during the E3 presentation, a sign that sales of the existing Wii console may finally by starting to slow.

With possibly an entire year until launch, Nintendo has time to shape the marketing strategy behind Wii U and prepare some AAA games for its arrival. If the company is able to do both of those things it will likely bring investors and gamers back on board.