NetEase (NTES) AI Stock Analysis

• Market Cap: $86.77B
• Dividend Yield: 2.03%
• Average Volume (3M): 616.71K
• Price to Earnings (P/E): 19.0
• Beta (1Y): 0.52
• Revenue Growth: 2.86%
• EPS Growth: 19.96%
• Country: US
• Employees: 26,028
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 2.08
• Shares Outstanding: 633,591,800
• 10 Day Avg. Volume: 603,251
• 30 Day Avg. Volume: 616,708
• PEG Ratio: 5.58
• Price to Book (P/B): 3.03
• Price to Sales (P/S): 4.00
• P/FCF Ratio: 11.23
• Enterprise Value/Market Cap: 0.78
• Enterprise Value/Revenue: 0.62
• Enterprise Value/Gross Profit: 0.98
• Enterprise Value/Ebitda: 1.85
• 1Y Price Target: $155.70
• Price Target Upside: 9.36% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 81 Outperform
• Price Target: $175.00 ▲(22.92% Upside)

NetEase's strong financial performance and positive earnings call sentiment are the most significant factors driving the stock score. The company's robust profitability, efficient operations, and successful game launches contribute to its high score. While technical analysis and valuation are less impactful, they support a stable outlook for the stock.

Positive Factors

Strong Financial Position

NetEase's robust profitability and efficient operations indicate a strong financial foundation, supporting sustainable growth and resilience against market fluctuations.

Successful Game Launches

Successful game launches like MARVEL Mystic Mayhem enhance NetEase's market position in gaming, driving revenue growth and expanding its user base.

AI and Innovation in Learning Services

AI-driven innovations in learning services, such as Youdao, indicate NetEase's capability to diversify and capitalize on emerging tech trends, enhancing long-term growth prospects.

Negative Factors

Challenges in New Game Growth

Despite initial success, sustaining growth for new games like MARVEL Mystic Mayhem is challenging, potentially impacting future revenue streams and market competitiveness.

Decline in Innovative Business Revenues

A decline in revenues from innovative businesses suggests potential weaknesses in diversification efforts, which could affect long-term revenue stability.

Competition in Shooting Games

Intense competition in the shooting game genre requires continuous innovation, posing a risk to maintaining market share and profitability in this segment.

NetEase Business Overview & Revenue Model

Company Description

NetEase, 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 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 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 142.37
• 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 Positive. The current price of 142.37 is below the 20-day moving average (MA) of 143.88, below the 50-day MA of 147.33, and above the 200-day MA of 123.55, indicating a neutral trend. The MACD of -1.95 indicates Positive momentum. The RSI at 46.66 is Neutral, neither overbought nor oversold. The STOCH value of 62.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NTES.

NetEase Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTES	81 Outperform	$86.77B	19.03	24.36%	2.03%	2.86%	19.96%
EA	68 Neutral	$50.23B	58.87	13.20%	0.38%	-1.45%	-11.99%
BILI	63 Neutral	$11.36B	373.83	1.58%	―	22.89%	―
PLTK	63 Neutral	$1.58B	18.12	―	9.57%	7.49%	-60.32%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
TTWO	50 Neutral	$43.25B	―	-86.61%	―	13.98%	-6.71%
RBLX	48 Neutral	$73.95B	―	-324.24%	―	32.70%	12.57%

NetEase Corporate Events

Netease’s Earnings Call: Growth Amid Challenges

In a recent earnings call, Netease expressed a generally positive sentiment, highlighting significant revenue growth and successful game launches. The company’s innovative offerings and strong community engagement were key drivers of this success. However, challenges were acknowledged in sustaining growth for new games and navigating the competitive landscape of shooting games.

NetEase Reports Strong Q2 2025 Earnings Growth

NetEase, Inc. is a leading internet and game services provider, known for its extensive gaming ecosystem and popular mobile and PC games in China and globally.