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Netease (NTES)
:NTES
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NetEase
(NASDAQ:NTES)
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Rating:80Outperform
Price Target:
$150.00
▼(-0.90% Downside)
NetEase's strong financial performance and positive earnings call are the most significant factors driving the stock score. The company's robust profitability, efficient operations, and successful game launches underscore its strategic focus and growth potential. Technical analysis and valuation provide a neutral to positive outlook, with fair valuation and stable technical indicators.
Positive Factors
Strong Financial Performance
NetEase's robust financial performance, with significant profit growth, underscores its operational efficiency and market strength, supporting long-term stability.
Successful Game Launches
Successful game launches enhance NetEase's market position and revenue potential, indicating strong product development and consumer engagement capabilities.
Cash Flow Generation
Strong cash flow growth supports NetEase's ability to fund investments, repurchase shares, and pay dividends, ensuring financial flexibility and shareholder value.
Negative Factors
Challenges in New Game Growth
Sustaining growth for new games is challenging, potentially impacting future revenue streams and requiring continuous innovation to maintain competitive edge.
Decline in Innovative Business Revenues
A decline in innovative business revenues suggests potential weaknesses in diversification efforts, which may affect long-term growth and market adaptability.
Competition in Shooting Games
Intense competition in the shooting game market requires continuous innovation, posing risks to market share and necessitating high-quality game development.
NetEase (NTES) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$90.92B
Dividend Yield1.96%
Average Volume (3M)716.26K
Price to Earnings (P/E)20.0
Beta (1Y)0.52
Revenue Growth2.86%
EPS Growth19.96%
CountryUS
Employees26,028
SectorCommunication Services
Sector Strength97
IndustryElectronic Gaming & Multimedia
Share Statistics
EPS (TTM)2.08
Shares Outstanding633,591,800
10 Day Avg. Volume710,379
30 Day Avg. Volume716,265
Financial Highlights & Ratios
PEG Ratio5.58
Price to Book (P/B)3.03
Price to Sales (P/S)4.00
P/FCF Ratio11.23
Enterprise Value/Market Cap0.74
Enterprise Value/Revenue0.62
Enterprise Value/Gross Profit0.98
Enterprise Value/Ebitda1.85
Forecast
1Y Price Target
$147.20Price Target Upside-2.75% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering10
NetEase Business Overview & Revenue Model
Company DescriptionNetEase, Inc. is a prominent Chinese technology company that operates in various sectors, primarily focusing on online gaming, e-commerce, and digital content distribution. Founded in 1997, NetEase is well-known for its high-quality online games, including popular titles such as 'Fantasy Westward Journey' and 'Knives Out.' Additionally, the company has established a strong presence in the e-commerce sector, offering services like online retail and advertising. NetEase also invests in music streaming and educational technology, further diversifying its portfolio and enhancing its market reach.
How the Company Makes MoneyNetEase generates revenue through several key streams. The largest portion of its income comes from online gaming, where it operates both self-developed games and licensed titles from international developers, such as Blizzard Entertainment. This includes revenue from in-game purchases and subscriptions. Another significant revenue source is e-commerce, where the company leverages its platforms to facilitate online retail, generating income from sales and advertising. Additionally, NetEase earns money through its digital content services, including music streaming subscriptions and advertisements. Strategic partnerships with global gaming companies and continuous investments in new technologies and platforms also contribute to its overall earnings.
NetEase Key Performance Indicators (KPIs)
Any
Gross Margin by Segment
Reveals the efficiency of each segment in generating profit relative to costs, helping investors assess competitive strength and pricing power within specific markets.
Reveals the efficiency of each segment in generating profit relative to costs, helping investors assess competitive strength and pricing power within specific markets.
Data provided by:
Main Street Data
Main Street DataNetEase Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant revenue growth and successful game launches, driven by innovative offerings and strong community engagement. However, challenges remain in sustaining growth for new games and in the competitive shooting game landscape.Q2-2025 Updates
Positive Updates
Revenue Growth and Gaming Expansion
Total revenues increased 9% year-over-year driven by a diverse portfolio of games. Revenue from games and related VAS rose 14% compared to the same period last year.
Successful Game Launches
MARVEL Mystic Mayhem surpassed 1 million players and topped iOS download charts. FragPunk reached #2 on PlayStation's North America free-to-play download chart.
Evergreen Titles and Community Engagement
Fantasy Westward Journey Online reached a new all-time high peak in concurrent players, surpassing 2.93 million. Identity V broke its quarterly revenue record.
AI and Innovation in Learning Services
Youdao delivered its first second quarter operating profit driven by AI innovations, including Mr. P AI Tutor and AI advertising placement optimizer.
Strong Financial Performance
Gross profit for the second quarter was RMB 18.1 billion, up 13% year-over-year. Non-GAAP net income attributable to shareholders was RMB 9.5 billion, up 22% year-over-year.
Negative Updates
Challenges in New Game Growth
MARVEL Mystic Mayhem faces long-term growth challenges despite its initial success in overseas markets.
Decline in Innovative Business Revenues
Net revenue from innovative businesses and others declined 18% year-over-year, due to decreased net revenue from Yanxuan advertising services.
Competition in Shooting Games
High expectations and competition in the shooting game genre present challenges, requiring continuous high-quality art production and gameplay innovation.
Company Guidance
During the second quarter of 2025, NetEase's total revenues increased by 9% year-over-year, reaching RMB 27.9 billion (USD 3.9 billion), with games and related VAS revenues rising 14% to RMB 22.8 billion. The company introduced several new game titles, contributing to the growth, including the strong performance of "MARVEL Mystic Mayhem," which topped iOS download charts in multiple regions. The gross profit for the quarter rose 13% year-over-year to RMB 18.1 billion, with a margin of 64.7%. Non-GAAP net income attributable to shareholders was RMB 9.5 billion, marking a 22% increase year-over-year. NetEase's cash position was robust, with approximately RMB 142.1 billion as of June 30, 2025. The company also repurchased 22.1 million ADS under its USD 5 billion share repurchase program.NetEase Financial Statement Overview
Summary
NetEase exhibits a strong financial position with robust profitability, efficient operations, and a solid balance sheet. The company is well-positioned for sustainable growth, supported by strong cash flow generation and low leverage. While revenue growth has moderated, the company's financial health remains excellent.Income Statement
NetEase demonstrates strong profitability with a consistent increase in gross and net profit margins over the years, reaching 62.7% and 30.2% respectively in TTM. Revenue growth is steady, albeit slowing, with a 2.24% increase in TTM. EBIT and EBITDA margins are robust, indicating efficient operations.90
Very Positive
Balance Sheet
The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.068 in TTM, reflecting prudent financial management. Return on equity is impressive at 24.2%, showcasing effective use of equity capital. The equity ratio is healthy, indicating a solid capital structure.85
Very Positive
Cash Flow
NetEase shows strong cash flow performance with a 10.99% growth in free cash flow in TTM. The operating cash flow to net income ratio is high, demonstrating efficient cash generation relative to net income. Free cash flow to net income ratio remains strong, supporting dividend and investment capabilities.88
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 109.68B | 105.30B | 103.47B | 96.50B | 87.61B | 73.67B |
| Gross Profit | 69.28B | 65.81B | 63.06B | 52.77B | 46.97B | 38.98B |
| EBITDA | 36.60B | 32.00B | 30.76B | 22.49B | 19.69B | 18.00B |
| Net Income | 34.21B | 29.70B | 29.42B | 20.34B | 16.86B | 12.06B |
Balance Sheet | ||||||
| Total Assets | 208.50B | 195.99B | 185.92B | 172.76B | 153.64B | 141.87B |
| Cash, Cash Equivalents and Short-Term Investments | 146.69B | 137.58B | 126.72B | 117.46B | 97.53B | 93.47B |
| Total Debt | 11.28B | 12.82B | 20.48B | 27.53B | 20.63B | 19.50B |
| Total Liabilities | 54.39B | 53.50B | 57.84B | 63.89B | 54.37B | 58.88B |
| Stockholders Equity | 149.59B | 138.69B | 124.29B | 104.73B | 95.33B | 82.13B |
Cash Flow | ||||||
| Free Cash Flow | 44.39B | 37.47B | 31.06B | 25.07B | 21.82B | 21.60B |
| Operating Cash Flow | 46.56B | 39.68B | 35.33B | 27.71B | 24.93B | 24.89B |
| Investing Cash Flow | 10.96B | 17.92B | -17.04B | -7.37B | -7.08B | -29.19B |
| Financing Cash Flow | -21.16B | -27.34B | -21.47B | -10.24B | -12.59B | 9.91B |
NetEase Technical Analysis
Positive
151.36
Price Trends
138.44
Positive
131.80
Positive
114.99
Positive
Market Momentum
4.16
Positive
59.50
Neutral
34.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTES, the sentiment is Positive. The current price of 151.36 is above the 20-day moving average (MA) of 147.80, above the 50-day MA of 138.44, and above the 200-day MA of 114.99, indicating a bullish trend. The MACD of 4.16 indicates Positive momentum. The RSI at 59.50 is Neutral, neither overbought nor oversold. The STOCH value of 34.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NTES.
NetEase Risk Analysis
NetEase disclosed 94 risk factors in its most recent earnings report. NetEase reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
NetEase Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $90.92B | 20.02 | 24.36% | 1.96% | 2.86% | 19.96% | |
75 Outperform | $48.38B | 48.54 | 17.13% | 0.39% | 2.68% | -6.15% | |
72 Outperform | $93.63B | -94.67 | -269.61% | ― | 27.39% | 16.59% | |
68 Neutral | $10.74B | 359.37 | -9.55% | ― | 22.89% | ― | |
60 Neutral | $47.25B | -10.70 | -121.49% | ― | 7.33% | -7.46% | |
59 Neutral | $1.35B | 15.62 | -98.41% | 11.11% | 4.98% | -60.29% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% |
* Communication Services Sector Average
NTES
NetEase
151.36
60.30
66.22%
EA
Electronic Arts
202.05
59.33
41.57%
TTWO
Take-Two
259.96
106.25
69.12%
BILI
Bilibili
27.33
3.95
16.89%
PLTK
Playtika Holding
3.91
-3.34
-46.07%
RBLX
Roblox
141.56
97.30
219.84%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.