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NetEase
(NASDAQ:NTES)
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Rating:79Outperform
Price Target:
$147.00
▲(22.96% Upside)
Action:Reiterated
Date:08/22/26
NTES scores well primarily on strong financial performance (high margins and a conservatively levered balance sheet), supported by a positive earnings-call backdrop highlighting margin expansion, strong game engagement, and substantial net cash with active buybacks/dividends. Valuation is reasonable with a solid dividend yield. The main constraints on the score are weaker recent free-cash-flow growth and only neutral-to-soft technical momentum (negative MACD).
Positive Factors
Sustained game-led revenue growth
Game revenue growth across newly launched and established titles supports NetEase’s core monetization engine. Continued player engagement, live updates and global expansion can sustain recurring in-game spending over the next several months.
Negative Factors
Weaker recent free-cash-flow trajectory
Although earnings convert to cash reasonably well, the sharp year-over-year FCF decline signals weaker cash momentum. If sustained, this could constrain investment capacity or reduce the durability of shareholder returns despite the strong cash balance.
Read all positive and negative factors
Positive Factors
Negative Factors
Sustained game-led revenue growth
Game revenue growth across newly launched and established titles supports NetEase’s core monetization engine. Continued player engagement, live updates and global expansion can sustain recurring in-game spending over the next several months.
Read all positive factors
NetEase Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Highlights profitability across different business units, indicating which segments are driving earnings and where there might be challenges or opportunities for improvement.
Highlights profitability across different business units, indicating which segments are driving earnings and where there might be challenges or opportunities for improvement.
Data provided by:
The Fly
The FlyNetEase (NTES) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$82.04B
Dividend Yield2.36%
Average Volume (3M)990.49K
Price to Earnings (P/E)17.1
Beta (1Y)0.56
Revenue Growth9.83%
EPS Growth-2.22%
CountryUS
Employees25,382
SectorCommunication Services
Sector Strength97
IndustryElectronic Gaming & Multimedia
Share Statistics
EPS (TTM)50.70
Shares Outstanding642,411,130
10 Day Avg. Volume1,043,266
30 Day Avg. Volume990,488
Financial Highlights & Ratios
PEG Ratio1.20
Price to Book (P/B)3.83
Price to Sales (P/S)5.45
P/FCF Ratio12.71
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$156.42Price Target Upside30.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)63.06
Revenue Forecast (FY)$120.62B
NetEase Business Overview & Revenue Model
Company Description
NetEase, Inc., a prominent technology firm founded in 1997 and headquartered in Hangzhou, People's Republic of China, delivers a broad spectrum of online services both within China and across international markets. Its core operations encompass on...
How the Company Makes Money
NetEase primarily makes money by monetizing its interactive entertainment portfolio. The largest revenue stream is typically online game services, where the company earns revenue from in-game purchases (virtual items, battle passes, character/skin...
NetEase Earnings Call Summary
Earnings Call Date:Aug 20, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 12, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive operational and financial picture: topline growth (7% YoY for 1H), strong game revenue performance (games/VAS +10% YoY in Q2), improving gross margins across core segments, healthy cash position and active shareholder returns. Product momentum across multiple franchises and advancements in AI (Youdao) and Cloud Music engagement reinforce the growth narrative. Offsetting factors include non-GAAP profit declines driven by investment losses, a modest QoQ decline in online games revenue, year-over-year weakness in the innovative/e-commerce segment, and product feedback that required early-stage optimizations for a recent release. Overall, positives (revenue growth, margin expansion, strong product engagement, cash and buybacks/dividend) outweigh the negatives (profit softness, select revenue softness and product adjustments).Positive Updates
Total Revenue Growth
Total net revenue for 1H 2026 reached RMB 60.7 billion (USD 8.9 billion), up 7% year-over-year; Q2 2026 total revenue was RMB 30.1 billion (USD 4.4 billion).
Negative Updates
Non-GAAP Profit Declines
Non-GAAP net income declined: Q2 non-GAAP net income was RMB 7.7 billion with a year-over-year decline primarily due to investment losses; 1H non-GAAP net income was down 8% year-over-year to RMB 19.0 billion.
Read all updates
Q2-2026 Updates
Positive
Negative
Total Revenue Growth
Total net revenue for 1H 2026 reached RMB 60.7 billion (USD 8.9 billion), up 7% year-over-year; Q2 2026 total revenue was RMB 30.1 billion (USD 4.4 billion).
Read all positive updates
Company Guidance
Management's guidance emphasized continued investment in high‑quality, AI‑enabled game development and disciplined live operations (expediting development and improving player experience with AI), ongoing global rollouts and content updates (Sea of Remnants global rollout; Ananta progressing toward launch, to be shown at Gamescom), and execution of its AI‑native strategy across Youdao and other businesses to drive retention and monetization. This outlook is anchored by strong scale and financial flexibility: Q2 revenue RMB30.1bn (H1 RMB60.7bn), games & VAS RMB25.0bn (online games RMB24.5bn in Q2, +10% YoY), H1 gross margin 69.9% (Q2 70.5%), games gross margin 76.1%, non‑GAAP Q2 net income RMB7.7bn (USD1.1bn) with non‑GAAP EPS USD1.78 per ADS, H1 non‑GAAP net income RMB19.0bn (USD2.8bn), total net cash RMB167.5bn, Q2 dividend USD0.096/share (USD0.48/ADS) and ~24.8m ADS repurchased (~USD2.3bn) under the USD5bn program; management also cited supporting KPIs such as Eggy Party 700m registered users and MAU >100m, Fantasy Westward Journey >10m active on launch day, Where Winds Meet positive Steam reviews >87%, Cloud Music DAU/MAU >30%, and Youdao Q2 revenue RMB1.5bn plus ~80% faster translation inference.NetEase Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
92
Very Positive
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 116.52B | 112.63B | 105.30B | 103.47B | 96.50B | 87.61B |
| Gross Profit | 78.24B | 72.40B | 65.81B | 63.06B | 52.77B | 46.97B |
| EBITDA | 45.35B | 43.07B | 38.14B | 37.11B | 27.11B | 24.38B |
| Net Income | 32.49B | 33.76B | 29.70B | 29.42B | 20.34B | 16.86B |
Balance Sheet | ||||||
| Total Assets | 232.29B | 221.56B | 195.99B | 185.92B | 172.76B | 153.64B |
| Cash, Cash Equivalents and Short-Term Investments | 179.90B | 167.04B | 137.58B | 126.72B | 117.46B | 97.53B |
| Total Debt | 12.61B | 6.39B | 12.82B | 20.48B | 28.46B | 21.69B |
| Total Liabilities | 60.67B | 56.35B | 53.50B | 57.84B | 63.89B | 54.37B |
| Stockholders Equity | 167.15B | 160.40B | 138.69B | 124.29B | 104.73B | 95.33B |
Cash Flow | ||||||
| Free Cash Flow | 49.91B | 48.32B | 37.47B | 31.06B | 25.07B | 21.82B |
| Operating Cash Flow | 51.15B | 49.36B | 39.68B | 35.33B | 27.71B | 24.93B |
| Investing Cash Flow | -66.44B | -32.18B | 17.92B | -17.04B | -7.37B | -7.08B |
| Financing Cash Flow | -14.82B | -19.71B | -27.34B | -21.47B | -10.24B | -12.59B |
NetEase Technical Analysis
Positive
119.55
Price Trends
126.84
Positive
121.44
Positive
124.68
Positive
Market Momentum
-0.68
Positive
51.77
Neutral
44.83
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 119.55 is below the 20-day moving average (MA) of 127.82, below the 50-day MA of 126.84, and below the 200-day MA of 124.68, indicating a bullish trend. The MACD of -0.68 indicates Positive momentum. The RSI at 51.77 is Neutral, neither overbought nor oversold. The STOCH value of 44.83 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $82.04B | 17.08 | 21.64% | 2.53% | 9.83% | -2.22% | |
65 Neutral | $7.12B | 34.14 | 9.32% | ― | 11.20% | ― | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
56 Neutral | $44.80B | -138.51 | -9.12% | ― | 15.30% | 92.77% | |
55 Neutral | $1.14B | -15.21 | -55.79% | ― | 4.07% | 45.58% | |
51 Neutral | $27.41B | -26.83 | -288.77% | ― | 41.33% | 0.75% | |
49 Neutral | $903.96M | -3.25 | 82.92% | 10.87% | 5.84% | -421.33% |
* Communication Services Sector Average
NTES
NetEase
128.17
-4.21
-3.18%
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PLTK
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NetEase Corporate Events
NetEase Files Revised July 2026 Share Capital Return with Hong Kong Exchange
Aug 11, 2026
NetEase filed a Form 6-K in August 2026 noting that it submitted a revised monthly return to the Hong Kong Stock Exchange on August 11, 2026, updating movements in its authorized share capital and issued shares for July 2026 and replacing an earli...
NetEase Sets August 20 Board Meeting and Earnings Release for Q2 and First-Half 2026
Aug 6, 2026
NetEase, Inc., a Cayman Islands–incorporated Chinese internet company listed in Hong Kong under stock code 9999, maintains principal executive offices in Hong Kong and is subject to both Hong Kong and U.S. securities regulation. Its governan...
NetEase Reports Stable Share Capital and Confirms Public Float Compliance in July 2026
Aug 6, 2026
NetEase reported to the U.S. SEC on August 6, 2026 that it had filed a monthly return with the Hong Kong Stock Exchange detailing movements in its authorized share capital and issued shares for July 2026. The filing shows no change in the company&...
NetEase Confirms Stable Share Capital in First Monthly Return After Hong Kong Primary Listing
Jul 7, 2026
NetEase, Inc., a major Chinese online entertainment and technology company listed in Hong Kong under stock code 09999, reported no changes in its authorized or issued share capital for the month ended 30 June 2026. The company maintained 1,000,300...
NetEase Sets June 30, 2026 for Conversion to Dual-Primary Listing in Hong Kong
Jun 25, 2026
NetEase has announced that, following a notice from the Hong Kong Stock Exchange on February 27, 2026 confirming that the majority of trading in its shares had permanently migrated to Hong Kong, it will convert from a secondary to a dual-primary l...
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.