NetEase (NTES) AI Stock Analysis

• Market Cap: $80.12B
• Dividend Yield: 2.12%
• Average Volume (3M): 770.81K
• Price to Earnings (P/E): 17.5
• Beta (1Y): 0.53
• Revenue Growth: 2.86%
• EPS Growth: 19.96%
• Country: US
• Employees: 26,028
• Sector: Communication Services
• Sector Strength: 92
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 2.06
• Shares Outstanding: 644,493,800
• 10 Day Avg. Volume: 1,043,610
• 30 Day Avg. Volume: 770,813
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.85
• Enterprise Value/Revenue: 0.63
• Enterprise Value/Gross Profit: 1.01
• Enterprise Value/Ebitda: 1.95
• 1Y Price Target: $141.25
• Price Target Upside: 8.40% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

• Rating: 82 Outperform
• Price Target: $151.00 ▲(15.89% Upside)

NetEase's strong financial performance and positive earnings call are the most significant factors driving the high score. The company's robust profitability, efficient operations, and strategic game launches contribute to its strength. Technical analysis and valuation provide moderate support, while challenges in certain segments slightly temper the overall outlook.

Positive Factors

Market Position

Several evergreen games have demonstrated strong performance, achieving top positions on China's iOS grossing chart after recent updates.

Profitability

Operating profit increased by 37% YoY, mainly due to disciplined operational expense control.

Revenue Growth

Online games revenue grew fast by 15% YoY, driven by sustained engagement in flagship titles and overseas success.

Negative Factors

Non-Gaming Challenges

NetEase Cloud music revenue decreased by 4%, indicating challenges in the non-gaming segment.

Revenue Decline

NetEase's Cloud music revenue declined by 8% YoY, mainly due to the decline in social entertainment revenue.

NetEase Business Overview & Revenue Model

Company Description

NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally. The company operates through Games and Related Value-Added Services; Youdao; Cloud Music; and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, and Youdao Listening Pod; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.

How the Company Makes Money

NetEase 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 Financial Statement Overview

Summary

NetEase demonstrates excellent financial health with strong profitability, efficient operations, and robust cash flow management. Its low leverage profile and consistent growth across key financial metrics underscore its financial strength.

Income Statement

NetEase shows strong growth and profitability in its TTM period, with a Gross Profit Margin of 62.7% and a Net Profit Margin of 30.2%. Revenue growth is stable, with a healthy increase of 1.9% from the previous year. The EBIT Margin is robust at 30.2%, and the EBITDA Margin is strong at 32.4%, indicating efficient operations and cost management.

Balance Sheet

The company maintains a strong financial position with a low Debt-to-Equity Ratio of 0.07, indicating minimal reliance on debt financing. The Return on Equity stands at an impressive 22.5%, showcasing effective use of equity capital. The Equity Ratio is solid at 71.6%, reflecting a strong asset position relative to liabilities.

Cash Flow

NetEase exhibits a strong cash flow position with a Free Cash Flow Growth Rate of 6.7% for the TTM period. The Operating Cash Flow to Net Income Ratio is 1.3, demonstrating effective conversion of net income to cash. The Free Cash Flow to Net Income Ratio is also high at 1.2, indicating strong cash generation relative to net income.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	105.30B	103.47B	96.50B	87.61B	73.67B
Gross Profit	65.81B	63.06B	52.77B	46.97B	38.98B
EBITDA	32.00B	30.76B	22.49B	19.69B	18.00B
Net Income	29.70B	29.42B	20.34B	16.86B	12.06B
Balance Sheet
Total Assets	195.99B	185.92B	172.76B	153.64B	141.87B
Cash, Cash Equivalents and Short-Term Investments	137.58B	126.72B	117.46B	97.53B	93.47B
Total Debt	12.82B	20.48B	27.53B	20.63B	19.50B
Total Liabilities	53.50B	57.84B	63.89B	54.37B	58.88B
Stockholders Equity	138.69B	124.29B	104.73B	95.33B	82.13B
Cash Flow
Free Cash Flow	37.47B	31.06B	25.07B	21.82B	21.60B
Operating Cash Flow	39.68B	35.33B	27.71B	24.93B	24.89B
Investing Cash Flow	17.92B	-17.04B	-7.37B	-7.08B	-29.19B
Financing Cash Flow	-27.34B	-21.47B	-10.24B	-12.59B	9.91B

NetEase Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 130.30
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTES, the sentiment is Neutral. The current price of 130.3 is below the 20-day moving average (MA) of 131.99, below the 50-day MA of 131.89, and above the 200-day MA of 106.63, indicating a neutral trend. The MACD of -0.34 indicates Positive momentum. The RSI at 48.23 is Neutral, neither overbought nor oversold. The STOCH value of 44.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NTES.

NetEase Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTES	82 Outperform	$80.12B	17.53	24.36%	2.12%	2.86%	19.96%
EA	76 Outperform	$43.70B	43.85	15.46%	0.44%	2.68%	-6.15%
RBLX	72 Outperform	$81.35B	―	-401.21%	―	27.39%	16.59%
BILI	69 Neutral	$10.04B	―	-4.29%	―	21.11%	87.93%
Sector *	66 Neutral	S$18.31B	17.30	-55.06%	5.03%	-9.46%	-8.93%
PLTK	59 Neutral	$1.36B	15.75	-220.61%	10.70%	4.98%	-60.29%
TTWO	55 Neutral	$42.83B	―	-89.29%	―	7.33%	-7.46%