Nintendo Stock (NTDOY) Doubles in 2006; Up Over 10% Since Wii Release

Despite solid sales and review accolades, the Wii in its first month of release has had setbacks. News of TV screens shattering from flying Wiimotes has permeated the national media. At the core of the controversy is the small strand of string that joins the wrist strap to the Wiimote. When heavy friction and sweaty hands wear down the thin joining string, it can break. If you happen to have a loose grip on the Wiimote when this happens, you end up launching the controller in various and sometimes costly directions.

On December 6, 2006, Green Welling LLP of Seattle Washington filed a national class action law suit against Nintendo for a breach of warranty with regards to the wrist straps. Nintendo has subsequently recalled 4 million of the launch wrist straps, at what will be a cost of millions to the company. It will replace them with a strap that secures to the Wiimote with a strand of string that is nearly twice as thick as the original.

What has not made the national news with the same frequency, however, is the price of Nintendo's stock (NTDOY). As of this morning, nearly a month after release of the Wii, NTDOY was up more than 10% over its November 16 pre-release price. Fueled by the popularity of both the DS and Wii, the stock has essentially ignored the strap recall and lawsuit. The 10% rise is in addition to a run up of the stock's price in the months before the release. If the current price of nearly $31 per share holds over the last few days of December, Nintendo's stock will have doubled in 2006. Nice returns for a company who future looked bleak a few years ago.