Stock Analysis & Ideas

What Do NetEase’s User Visit Stats Tell Us?

NetEase (NASDAQ: NTES) offers various services such as e-commerce and payment platforms, advertising services, and music streaming. The company’s portfolio includes strong flagship PC games, such as the Fantasy Westward Journey Online, Justice, Onmyoji: Yokai Koya, PES Club Manager, King of Hunters and MARVEL Duel, which are major revenue drivers. The popularity of its games is also driving user growth and retention.

Given that NetEase is an Internet tech company, tracking user visits to its website is key to estimating the popularity of its offerings, and thus potential revenue generating opportunities. Ahead of its Q4 print, which is expected to come in the last week of February, we took a look into the company’s website visit statistics to gain insights into how the NTES stock might have performed in Q4.

Gaming Domains Lead the Rally

What we found on TipRanks’ new website visit tracking tool was interesting. The overall estimated visits to all of NetEase’s domains were up 10.79% from the preceding quarter (Q3). When we dug deeper, we found that this gain in virtual visits was a result of the increasing footfall to the company’s gaming domains.

The primary website netease.com actually recorded a 22.34% drop in total estimated visits globally; whereas its combined gaming websites, namely, marvelsuperwar.com, cdgame.com, eomoba.com, onmyoji-card.com, and warboundstormmobile.com, witnessed a whopping 255.54% sequential growth in estimated user visits.

Further, user visits to these gaming platforms spiked in December, up 747.74% from November, after remaining relatively flat for the first two months of the quarter. The rising cases of Omicron kept many parts of the world under lockdown, which might be an explanation for this massive hike in user footfall in December. Moreover, the holidays also led to increased online activity, leading gaming enthusiasts to the website.

Gaming websites primarily generate revenues through advertising and in-game purchases and upgrades. Evidently, it is highly possible that the significant growth in estimated user visits to the company’s website has had a positive impact on the top line.

Morgan Stanley analyst Alex Poon reiterated a Buy on NetEase, with a price target of $140. Explaining that changes to the app stores are likely to act as a tailwind to NTES, Poon said, “Rising bargaining power of top content should lead to app store fee reduction globally. We see this process accelerating in 2021.”

The rest of Wall Street also seems to be optimistic about the company’s prospects, with a Strong Buy based on 6 unanimous Buys. The NTES stock predictions point at an average price target of $136.83.

​To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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