Nintendo’s shares fell 4.6% on Thursday on the Osaka Securities Exchange. That came after a 5.7% decrease Wednesday, when Nintendo announced the Wii U. A downgrade by UBS Securities, which cut its rating on Nintendo from Buy to Neutral, contributed to Thursday's plunge. UBS analyst Yuki Nakayasu told The Wall Street Journal that he didn’t believe the Wii U or the 3DS would be able to draw casual gamers the way Wii had when it was originally introduced. He also maintained that it would be difficult for Nintendo to compete with smartphones for that market.
Arvind Bhatia, managing director with Sterne Agee, says Nintendo is a victim of sky-high expectations. Wii U is a solid product, Bhatia says, but analysts were expecting more. "It's more evolutionary than revolutionary," says Bhatia. "It seemed more like a catch-up to others than something completely different." Bhatia says that investors may be overreacting. "I'm not sure if [the reaction] is warranted," he says. "Wii still has an install base of 80 million and strong content."