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NetEase Inc ADR NTES

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Morningstar’s Analysis

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New Titles Boost NetEase's Third-Quarter Earnings, and We Expect Strong Performance to Continue

Ivan Su Senior Equity Analyst

Analyst Note

| Ivan Su |

Narrow-moat NetEase reported solid third-quarter numbers, and we think such a strong showing will continue into 2022 as Harry Potter goes global and Naraka ports to consoles. We maintain our view that there are plenty of revenue opportunities ahead for NetEase’s games, whether they are in or outside of China. While share price has bounced back from lows in August, we think investors are still overreacting to regulatory overhang brought by measures around limiting playing time for under-18s. These concerns will ultimately go away once license approvals resume, which could happen as early as this month. We maintain our fair value estimate at $139 for NetEase and view its shares as undervalued.

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Company Profile

Business Description

NetEase, which started on an Internet portal service in 1997, is a leading online services provider in China. Its key services include online/mobile games, cloud music, media, advertising, email, live streaming, online education, and e-commerce. The company develops and operates some of the China's most popular PC client and mobile games, and it partners with global leading game developers, such as Blizzard Entertainment and Mojang (a Microsoft subsidiary).

No.599 Wangshang Road, NetEase Building
Hangzhou, 310052, China, People's Republic of
T +86 57189853378
Sector Communication Services
Industry Electronic Gaming & Multimedia
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type
Employees 28,239