One-glance verdict
Undervalued
$452.04 our estimate vs market $114.09
Wall Street consensus: $163.42 (-63.8% lower than our fair-value estimate)
75% below our estimate, below the bear case
Fundamentals snapshot
NetEase, Inc.
NTES · NMS · Communication Services · Electronic Gaming & Multimedia
Current price
$114.09
52-week range
$106.06 - $149.11
Market cap
$73.06B
Balance sheet
Healthy
9.06x Adequate
Net cash $24.46B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 11.6% last year.
- Reward Returns 20.4% on equity, ahead of 83% of its peers.
- Risk Stock trades 605.8% above its 5-year average P/E.
- Risk Insider ownership is only 1.4% (peer median: 1.8%).
What this company does
NetEase, Inc.
NetEase is a Chinese company that mainly makes money from online video games and music streaming. They also offer online learning services and other internet content, like digital books and smart learning devices. It matters because these digital services are very popular in China, and their profits (the money left after paying for everything) from these areas show how well they are doing.
How the company got here
NetEase was founded in 1997, starting as an internet technology company in China. Its early focus was on providing email services and later expanded into online gaming, which quickly became its main revenue driver. A key turning point was securing licenses to operate popular international games in China, allowing it to tap into a massive and growing market. Over the years, NetEase has diversified beyond gaming, venturing into areas like music streaming and online education, aiming to build a broader internet ecosystem.
What it actually does
NetEase is a Chinese internet company that primarily operates in the online gaming, music streaming, and online education sectors. Think of it as a company that creates and distributes entertainment and learning experiences for millions of users. It develops its own video games, licenses popular games from other companies to bring them to the Chinese market, and offers a music streaming service. Additionally, it has a significant presence in online education through its Youdao platform, providing various learning tools and courses.
Games and Related Value-Added Services
This is NetEase's largest business segment, making up the bulk of its revenue. It involves developing and operating mobile and PC games, both those created in-house and those licensed from other developers. Users pay to play these games, often through in-app purchases for virtual items or to advance in the game. This segment also includes selling merchandise related to popular game titles, adding another revenue stream from its gaming intellectual property.
Youdao
Youdao is NetEase's online intelligent learning services segment, acting as a significant contributor to the company's diversification efforts. It offers a range of digital learning products and services, including online courses, AI-powered learning tools like virtual tutors and translation apps, and smart educational devices such as dictionary pens. Customers, primarily students and lifelong learners in China, pay for premium courses, subscriptions to learning tools, and the purchase of these smart devices.
NetEase Cloud Music
This segment operates a popular music streaming service in China, competing with other major platforms. Users can stream a vast library of songs, with revenue generated through subscriptions for premium features, such as ad-free listening and higher audio quality. It also earns income from online advertising and by selling virtual gifts that users can send to artists during live streaming events, fostering a community around music discovery and artist support.
Innovative Businesses and Others
This segment encompasses NetEase's newer ventures and less defined business areas, including online marketing services. It provides performance-based advertising, where clients pay based on the results of their campaigns, and global marketing services. This segment also includes the development and sale of smart devices, which are often integrated with their other services, and potentially other emerging businesses that don't fit neatly into the main categories.
What management is betting on now
NetEase's management is focused on strengthening its core gaming business by developing high-quality, innovative titles for both domestic and international markets. They are also investing heavily in expanding Youdao's AI capabilities and course offerings to capture more of the growing online education market. Furthermore, the company aims to enhance user engagement on NetEase Cloud Music through exclusive content and interactive features. Diversification into new areas and continued international expansion are key strategic priorities to ensure sustained growth.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$5.26B
FY2025 Q4
$7.10B
Revenue
$16.11B
Net income
—
Diluted EPS
1.50
Operating cash flow
$7.26B
Free cash flow
$7.10B
Fetching…
Sources
Revenue
$14.43B
Net income
—
Diluted EPS
1.26
Operating cash flow
$5.44B
Free cash flow
$5.26B
Fetching…
Sources
Is it cheap or expensive?
Fair value $452.04 vs current price $114.09
Wall Street consensus is the average analyst price target: $163.42 (-63.8% lower than our fair-value estimate).
Our most-likely fair value is $452.04 a share — about 296.2% above today's price of $114.09, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $24.5B - more cash than debt. Interest coverage 9.1x.
Net debt
$-24.46B
Interest coverage
9.06x
NetEase, Inc.'s profit covers its interest bill about 9.1 times over. which is stronger than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
NTES
BASELINE
NetEase, Inc.
Total debt $1.89B Interest coverage 9.06x This is the baseline the peer rows are being compared against.
Total debt $70.89B Interest coverage 18.49x +104% vs NTES Carries about 2.0x more debt cushion than NTES.
Total debt $1.87B Interest coverage 21.92x +142% vs NTES Carries about 2.4x more debt cushion than NTES.
Total debt $2.94B Interest coverage -0.67x -100% vs NTES This peer has almost no interest-payment cushion compared with NTES.
Total debt $4.13B Interest coverage 59.07x +552% vs NTES Carries about 6.5x more debt cushion than NTES.
Total debt $1.84B Interest coverage -30.79x -100% vs NTES This peer has almost no interest-payment cushion compared with NTES.
What you should know
The case for and against NTES
3 Rewards
2 Risks
Rewards
-
Revenue grew 11.6% last year.
-
Returns 20.4% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 605.8% above its 5-year average P/E.
-
Insider ownership is only 1.4% (peer median: 1.8%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
15.85x
Forward P/E
10.61x
P/B
14.61x
P/S
0.63x
EV/EBITDA
5.10x
PEG ratio
1.17x
Profitability
How much profit each dollar creates
Gross margin
67.2%
Operating margin
40.2%
Net margin
27.9%
ROE
20.4%
ROA
11.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.07x
Current ratio
3.45x
Quick ratio
3.26x
Total debt
$1.89B
Total cash
$26.35B
Growth
How the business has been compounding
Revenue TTM
$59.09B
Revenue 5Y CAGR
4.0%
EPS TTM
7.20
EPS 5Y CAGR
19.3%
Cash flow
How much cash the business throws off
Operating CF TTM
$21.69B
Free CF TTM
$7.10B
FCF margin
12.0%
Dividend
Shareholder payout
Yield
2.5%
Payout ratio
41.9%
Last ex-div date
2026-09-03