What's going on?

Nintendo�s stock price fell 18% (the maximum that a Japanese stock is allowed to fall in a single day) on Monday after the company put out a statement that said it will not be increasing its prediction for its full-year profit � despite the enormous success of Pok�mon Go.

What does this mean?

The problem is that Nintendo doesn�t actually own Pok�mon Go (as we pointed out). The hugely popular smartphone-based game is a joint venture between the Pok�mon Company and Niantic Inc. � Nintendo owns stakes in both companies but its combined �effective economic stake� in the game is only 13% (according to the investment bank Macquarie). Perhaps some investors didn�t realize that, but it�s likely that the stock�s selloff had more to do with Nintendo not increasing its profit expectations for this year despite the huge success of the game.

Why should I care?

For the stock: Pok�mon Go has shown investors what Nintendo could achieve with its library of old games.

For years, Nintendo refused to produce mobile games that used its famous characters (like Super Mario) because they feared that it would cannibalize sales of their game consoles. But Nintendo changed its strategy last year � and Pok�mon Go has shown how wildly popular such games can become. Nintendo does have its own mobile games initiative (in partnership with DeNA), e.g. games from the Animal Crossing and Fire Emblem franchises are about to be launched soon. Investors are hoping that they find at least some of the success that Pok�mon Go has experienced.

The bigger picture: Pok�mon Go�s success has highlighted some of the potential of �augmented reality� (AR).

A crucial element of AR is that it combines your real-life surroundings with something virtual. Eventually, AR won�t just be about chasing Pok�mons around � it will be about things like allowing surgeons to see inside a patient while operating and soldiers to see battleground features imposed on their real-life vision (that�s the hope for this technology, at least).