# NetEase (NTES.US)

Canonical: https://gigainvestors.com/s/NTES

Analysis as of: 2026-10-16T07:30:42.326Z. Financial observations: FY1999–FY2026.

Listing currency: USD. Reporting currency: CNY.

## Verdict

A wonderful business at a fair price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: yes.

Share price: $127.11 per share; close as of 2026-10-15.

Estimated value: low $144.94 per share, central $184.17 per share, high $208.84 per share. Buy at or below the central value $184.17 per share. Valuation as of 2026-10-16T07:30:42.326Z; scenarios are not confidence intervals.

Expected annual return: 14.4% at the stated quote. About 14.4% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 0 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 0

- Operating margin variation: 0.22×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.29×

- FY2018: 0.19×

- FY2019: 0.23×

- FY2020: 0.20×

- FY2021: 0.19×

- FY2022: 0.20×

- FY2023: 0.27×

- FY2024: 0.28×

- FY2025: 0.32×

- LTM to Jun 2026: 0.35×

### moat: pass

- Years with nonpositive invested capital use equity plus debt and leases; positive earnings with no positive capital are shown above 100%.

- ROIC, median of available years: >100%

- ROIC, second-lowest year: 74.1%

- Typical minus recent gross margin: -6.4 pp

- Typical gross margin (annual median): 56.1%

- Recent gross margin (lower of latest and 3-year median): 62.5%

- Years with nonpositive capital: 1

- Capital spending / revenue: 3.8%

- ROIC including acquisitions, ten-year median: >100%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: >100%

- FY2017: >100%

- FY2018: 86.9%

- FY2019: >100%

- FY2020: >100%

- FY2021: 74.1%

- FY2022: >100%

- FY2023: >100%

- FY2024: >100%

- FY2025: 18.3%

### economics: pass

- Owner earnings / net income, 5-yr: 1.01×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: CNY 131B

- Net income, five-year total: CNY 130B

- Return on incremental invested capital: 262.0%

- Working capital / revenue, annual change: -1.0 pp

- Working capital / revenue, change between three-year averages: -7.1 pp

- Working capital / revenue, final three-year average: 6.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.01×

- FY2022: 1.01×

- FY2023: 0.98×

- FY2024: 1.01×

- FY2025: 1.04×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 118.6% vs 147.5%

- Per-share earnings: 16.17 to 46.31 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.3%

- Ordinary dilution, 5-year annual growth: -1.1%

- Market cap gain: CNY 404B

- Cumulative retained earnings: CNY 114B

- Diluted shares, 10-year annual growth: -0.3%

- Diluted shares, 5-year annual growth: -1.1%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 14.1%

- Per-share value change: CNY 30.14

- Per-share value, starting three-year median: CNY 16.17

- Per-share value, ending three-year median: CNY 46.31

- Buybacks concentrated in cheaper years (correlation): -0.21

- Average buyback yield: 1.8%

- Buyback history: 8 years

- Debt-funded buybacks: No

- Acquisition spending: CNY 7.6B

- Cumulative net income, 10 years: CNY 192B

- ROIC, first three-year median: >100%

- ROIC, last three-year median: >100%

Chart: Earnings per share; fiscal year observations.

- FY2016: CNY 17.53

- FY2017: CNY 16.17

- FY2018: CNY 9.55

- FY2019: CNY 32.51

- FY2020: CNY 17.68

- FY2021: CNY 25.36

- FY2022: CNY 31.11

- FY2023: CNY 45.26

- FY2024: CNY 46.31

- FY2025: CNY 52.29

### accounting: pass

- Sloan accruals: -7.0%

- Receivables to sales index (DSRI): 0.88×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 7.4%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.46×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.04×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -6.7%

- FY2017: -1.7%

- FY2018: -8.4%

- FY2019: 3.6%

- FY2020: -9.0%

- FY2021: -5.3%

- FY2022: -4.3%

- FY2023: -3.2%

- FY2024: -5.1%

- FY2025: -7.0%

## Holders

- [Sarah Ketterer](https://gigainvestors.com/CAU): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [David Hoeft](https://gigainvestors.com/DAC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Christopher Davis](https://gigainvestors.com/DAV): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to shrink 0.1% a year for ten years · sales +3.5%

Story as of 2026-10-16T09:59:16.891Z; price observation 2026-10-15.

Price needs cash profits to shrink 0.1% a year for ten years

- 2025-05-15: China's NetEase Stock Pops On Q1 Performance Fueled By Gaming Growth, Strong Cash Flow ([finance.yahoo.com](https://finance.yahoo.com/news/chinas-netease-stock-pops-q1-123111920.html))

- 2025-08-14: NetEase misses Q2 top and bottom line estimates, shares dip ([finance.yahoo.com](https://finance.yahoo.com/news/netease-misses-q2-top-bottom-091321947.html))

- 2026-02-11: NetEase Profit Falls on Base Effect, Slower Revenue Growth ([finance.yahoo.com](https://finance.yahoo.com/m/95615518-c07a-3831-b042-736a5fc5c561/netease-profit-falls-on-base.html))

- 2026-03-09: Market Chatter: Netease to End Funding for Nagoshi Studio as Gaming Investments Shrink ([finance.yahoo.com](https://finance.yahoo.com/news/market-chatter-netease-end-funding-102249807.html))

- 2026-08-20: NetEase misses second-quarter profit forecasts; shares slide ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/netease-misses-second-quarter-profit-094859297.html))

### Sales · FY2025–2026

sales +3.5%; source https://www.sec.gov/Archives/edgar/data/1110646/000110465926043468/ntes-20251231x20f.htm; observed 2026-04-15.

- FY2017: CNY 44B 

- FY2018: CNY 51B 

- FY2019: CNY 59B 

- FY2020: CNY 74B 

- FY2021: CNY 88B 

- FY2022: CNY 96B 

- FY2023: CNY 103B 

- FY2024: CNY 105B 

- FY2025: CNY 113B 

- FY2026: CNY 117B 

### Gross margin · FY2025

gross margin 64.3%; source https://www.sec.gov/Archives/edgar/data/1110646/000110465926043468/ntes-20251231x20f.htm; observed 2026-04-15.

- FY2016: 56.7% 

- FY2017: 58.3% 

- FY2018: 55.5% 

- FY2019: 53.3% 

- FY2020: 52.9% 

- FY2021: 53.6% 

- FY2022: 54.7% 

- FY2023: 60.9% 

- FY2024: 62.5% 

- FY2025: 64.3% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in electronic gaming & multimedia; annual sales are CNY 112.6 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1110646/000110465926043468/ntes-20251231x20f.htm (filed 2026-04-15); FY2025: revenue 112625807000; grossProfit 72401868000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); NTES.US: 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; NetEase Cloud Music; and Innovative Businesses and Others segments. It develops and operates mobile and PC games; and offers games licensed from other developers. The company also provides live streaming service, and other related or ancillary value-added services related to games, such as the sale of game-themed merchandise. In addition, it offers digital content services with interactive learning features, including Youdao Lingshi and Youdao Literature; STEAM courses consisting computer coding courses and other STEAM courses; and adult courses, such as China University massive open online course. Further, the company provides Youdao Dictionary, an online language tool; Confucius, a large language model for the education sector; Hi Echo, an AI-driven virtual English-speaking tutor; Mr. P AI Tutor, a conversation-based tool; Youdao Desktop Translation, a desktop dictionary tool; U-Dictionary, an online dictionary and translation app; iRecord, an audio transcription tool; LectMate, an interpretation software for study-abroad lecture scenarios; iArch, an AI home design software; Baby Genius, an AI baby generator; and One Translate Translator, a translation tool for travelers. It also offers online marketing services consisting of performance-based advertising services, and global marketing and promotion services through banners, text links, videos, logos, buttons, and rich media. Additionally, the company develops and offers smart devices, including Youdao Dictionary Pen, Youdao Listening Pod, and Youdao Smart Learning Pad. NetEase, Inc. was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. The company was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.

### Why customers stay

Margins ranged from 60.9% to 64.3% during 2023–25; it earns over 100% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2023: grossProfit / revenue = 60.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2024: grossProfit / revenue = 62.5%.

- Source: https://www.sec.gov/Archives/edgar/data/1110646/000110465926043468/ntes-20251231x20f.htm (filed 2026-04-15); FY2025: grossProfit / revenue = 64.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); 10-year return on capital observations [[2016,1.905740824219091],[2017,1.1859518712873192],[2018,0.8688718683817046],[2019,1.8180561896602017],[2020,1.486874507811388],[2021,0.7408239455045303],[2022,1.231050433400058],[2023,1.475056877616313],[2024,2.1824817795327984],[2025,0.1832219594746195]]; median 1.3530536555081856. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back CNY 621.9 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2016: growth capex 812512000; upkeep 327515000; owner earnings 11604520000. Growth capex / owner earnings = 0.07001685550113232.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2017: growth capex 555958448.2932239; upkeep 1293487551.7067761; owner earnings 10206229448.293224. Growth capex / owner earnings = 0.05447246224571172.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2018: growth capex 612671161.038146; upkeep 6273341838.961854; owner earnings 1939200161.038146. Growth capex / owner earnings = 0.315940135189631.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2019: growth capex 682174676.7393403; upkeep 2646609323.2606597; owner earnings 21204688676.73934. Growth capex / owner earnings = 0.032170935736852264.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2020: growth capex 0; upkeep 3290487000; owner earnings 12230049000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2021: growth capex 0; upkeep 3110009000; owner earnings 17022560000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2022: growth capex 0; upkeep 2643484000; owner earnings 20552325000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2023: growth capex 492095706.2687526; upkeep 3783781293.7312474; owner earnings 28688030706.268753. Growth capex / owner earnings = 0.017153345634185427.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); FY2024: growth capex 0; upkeep 2206388000; owner earnings 29909115000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/1110646/000110465926043468/ntes-20251231x20f.htm (filed 2026-04-15); FY2025: growth capex 0; upkeep 1036350000; owner earnings 34970877000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); Dividend observations: [[2016,2546165000],[2017,3257607000],[2018,1440194000],[2019,8840634000],[2020,4280462000],[2021,3508377000],[2022,6723667000],[2023,8013903000],[2024,11165338000],[2025,13449003000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/1110646/000110465926043468/ntes-20251231x20f.htm (filed 2026-04-15); FY2025: cash repurchases 621916000 CNY.

### Are managers owners

Insiders own 1.4% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); NTES.US SharesStats.PercentInsiders = 1.391 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits shrink 0.1% yearly over ten years; actual growth was 18.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-15); Ten-year compound average after fade. Initial solved rate -0.03212101372509081. Price 127.11; FX 0.14944; discount 0.1; same compounder ten-year fade to terminal 0.03. FY2015 owner earnings/share 10.167321078398073 → FY2025 54.16958574085313. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $51.40 per share

- 2016-11: $44.82 per share

- 2016-12: $43.07 per share

- 2017-01: $50.78 per share

- 2017-02: $61.01 per share

- 2017-03: $56.80 per share

- 2017-04: $53.08 per share

- 2017-05: $56.96 per share

- 2017-06: $60.13 per share

- 2017-07: $62.26 per share

- 2017-08: $55.17 per share

- 2017-09: $52.76 per share

- 2017-10: $56.38 per share

- 2017-11: $65.74 per share

- 2017-12: $69.01 per share

- 2018-01: $64.03 per share

- 2018-02: $58.67 per share

- 2018-03: $56.08 per share

- 2018-04: $51.41 per share

- 2018-05: $45.66 per share

- 2018-06: $50.53 per share

- 2018-07: $51.60 per share

- 2018-08: $39.54 per share

- 2018-09: $45.65 per share

- 2018-10: $41.57 per share

- 2018-11: $45.41 per share

- 2018-12: $47.07 per share

- 2019-01: $50.39 per share

- 2019-02: $44.64 per share

- 2019-03: $48.29 per share

- 2019-04: $56.91 per share

- 2019-05: $49.72 per share

- 2019-06: $51.15 per share

- 2019-07: $46.16 per share

- 2019-08: $51.00 per share

- 2019-09: $53.24 per share

- 2019-10: $57.17 per share

- 2019-11: $63.06 per share

- 2019-12: $61.33 per share

- 2020-01: $64.15 per share

- 2020-02: $63.74 per share

- 2020-03: $64.19 per share

- 2020-04: $68.99 per share

- 2020-05: $76.58 per share

- 2020-06: $85.88 per share

- 2020-07: $91.68 per share

- 2020-08: $97.44 per share

- 2020-09: $90.93 per share

- 2020-10: $86.79 per share

- 2020-11: $90.37 per share

- 2020-12: $95.77 per share

- 2021-01: $114.99 per share

- 2021-02: $109.85 per share

- 2021-03: $103.26 per share

- 2021-04: $112.06 per share

- 2021-05: $117.93 per share

- 2021-06: $115.25 per share

- 2021-07: $102.21 per share

- 2021-08: $97.42 per share

- 2021-09: $85.40 per share

- 2021-10: $97.59 per share

- 2021-11: $107.73 per share

- 2021-12: $101.78 per share

- 2022-01: $103.36 per share

- 2022-02: $95.34 per share

- 2022-03: $89.69 per share

- 2022-04: $95.33 per share

- 2022-05: $103.73 per share

- 2022-06: $93.36 per share

- 2022-07: $92.98 per share

- 2022-08: $88.51 per share

- 2022-09: $75.60 per share

- 2022-10: $55.62 per share

- 2022-11: $71.12 per share

- 2022-12: $72.63 per share

- 2023-01: $88.61 per share

- 2023-02: $77.64 per share

- 2023-03: $88.44 per share

- 2023-04: $89.13 per share

- 2023-05: $85.08 per share

- 2023-06: $96.69 per share

- 2023-07: $108.74 per share

- 2023-08: $103.48 per share

- 2023-09: $100.16 per share

- 2023-10: $106.92 per share

- 2023-11: $113.48 per share

- 2023-12: $93.16 per share

- 2024-01: $97.64 per share

- 2024-02: $107.92 per share

- 2024-03: $103.47 per share

- 2024-04: $93.47 per share

- 2024-05: $89.03 per share

- 2024-06: $95.58 per share

- 2024-07: $92.11 per share

- 2024-08: $80.44 per share

- 2024-09: $93.51 per share

- 2024-10: $80.51 per share

- 2024-11: $87.48 per share

- 2024-12: $89.21 per share

- 2025-01: $102.85 per share

- 2025-02: $99.72 per share

- 2025-03: $102.92 per share

- 2025-04: $107.06 per share

- 2025-05: $121.76 per share

- 2025-06: $134.58 per share

- 2025-07: $130.30 per share

- 2025-08: $136.19 per share

- 2025-09: $151.99 per share

- 2025-10: $140.10 per share

- 2025-11: $138.05 per share

- 2025-12: $137.62 per share

- 2026-01: $128.83 per share

- 2026-02: $114.97 per share

- 2026-03: $111.94 per share

- 2026-04: $117.51 per share

- 2026-05: $122.82 per share

- 2026-06: $128.14 per share

- 2026-07: $133.27 per share

- 2026-08: $121.78 per share

- 2026-09: $121.16 per share

- 2026-10: $127.11 per share

## Annual estimated value (USD per share)

- FY2016: low $45.30 per share, central $51.01 per share, high $57.98 per share

- FY2017: low $43.28 per share, central $48.46 per share, high $54.78 per share

- FY2018: low $50.00 per share, central $55.70 per share, high $62.88 per share

- FY2019: low $59.96 per share, central $65.99 per share, high $74.02 per share

- FY2020: low $70.54 per share, central $92.13 per share, high $104.70 per share

- FY2021: low $73.57 per share, central $95.87 per share, high $108.86 per share

- FY2022: low $85.86 per share, central $109.28 per share, high $123.64 per share

- FY2023: low $101.30 per share, central $133.27 per share, high $151.56 per share

- FY2024: low $107.05 per share, central $141.07 per share, high $160.25 per share

- FY2025: low $137.38 per share, central $174.98 per share, high $198.63 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 20-F filing](https://www.sec.gov/Archives/edgar/data/1110646/000110465926043468/ntes-20251231x20f.htm); period 2025-12-31, filed 2026-04-15.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.