Financial

NetEase – Chinese Gaming And Multi-Media Play

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Summary

  • NetEase (NTES) has shown strong technical performance, with a 29.61% increase since the Trend Seeker buy signal on 9/26, and is above key moving averages.
  • The company operates across various segments including online games, music streaming, and intelligent learning services, with a market cap of $65.06 billion and a P/E of 15.25.
  • Wall Street analysts are optimistic, issuing 26 strong buy ratings, with price targets ranging from $83 to $161 and a consensus of $117.
  • Despite its volatility, NetEase is seen as undervalued by MorningStar and is expected to benefit from an improving regulatory environment and future game releases.

    • The Chart of the Day belongs to the Chinese electronic gaming and multimedia company NetEase (NTES). I found the stock by using Barchart’s powerful screening functions to find stocks with the highest technical buy signals, highest Weighted Alpha, superior current momentum and having a Trend Seeker buy signal then used the Flipchart feature to review the charts for consistent price appreciation. Since the Trend Seeker signaled a buy on 9/26 the stock is up 29.61%.(Click on image to enlarge)NTES Price vs Daily Moving Averages
    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. Barchart’s Opinion Trading systems are listed below. Please note that the Barchart Opinion indicators are updated live during the session every 20 minutes and can therefore change during the day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report.
    Barchart Technical Indicators:

  • 8% technical sell signals
  • 7.88+ Weighted Alpha
  • 4.58% gain in the last year
  • .55 – 60 month Betas
  • Trend Seeker buy signal
  • Above its 20, 50 and 100 day moving averages
  • 9 new highs and up 29.61% in the last month
  • Relative Strength Index 81.88%
  • Technical support level at $94.06
  • Recently traded at $104.20 with 50 day moving average of $85.94

    • Fundamental Factors:

  • Market Cap $65.06 billion
  • P/E 15.25
  • Dividend yield 2.07%
  • Wall Street analysts predict revenue will grow 5.00% this year and another 8.70% next year
  • Earnings are estimated to increase .80% this year, an additional 10.00% next year and continue to compound at an annual rate of .87% for the next 5 years

    • Analysts and Investor Sentiment — I don’t buy stocks because everyone else is buying but I do realize that if major firms and investors are dumping a stock it’s hard to make money swimming against the tide:

  • Wall street analysts issued 26 strong buy, 4 buy and 3 hold opinions on the stock
  • Analysts’ price targets ate between $83 and $161 with a consensus of $117
  • CFRAs MarketScope rates the stock a 4 star buy with a price target of $110 and comments:”We are positive on NTES for its strong positioning in the mobile gaming and music streaming space. We see an improving regulatory environment ahead after significant pressure on Youdao and its GVAS segment in 2022.”
  • MorningStar give the stock its above average rating of 5 stars with a Fair Value of $158 or 38% under valued and comments:” NetEase’s commitment and patience in developing next-generation games will yield substantial rewards over time. We anticipate that the upcoming release of Where Winds Meet will be a commercial success and a significant driver of growth in 2025 and beyond.”
  • 31,640 investors monitor the stock on Seeking Alpha

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