NetEase Shares Fall After Profit Miss
By Sherry Qin
NetEase shares fell after the Chinese videogame giant posted weaker-than-expected quarterly results.
The company's Hong Kong-listed stock was recently 3.9% lower after falling as much as 5.3% early Thursday. Its American depositary receipts closed 4.1% lower at US$118.50 overnight.
The game maker on Wednesday reported a 29% drop in fourth-quarter net profit from a year earlier, while adjusted net profit fell 27%, both missing market expectations. The company recorded an investment loss of around 1.7 billion yuan, equivalent to US$245.9 million, due to fluctuations in holdings of Alibaba and PDD shares during the quarter.
On its earnings call, executives noted that while NetEase's deferred revenue growth remains robust, its revenue growth has lagged behind due to a longer revenue recognition period for certain virtual items sold in games.
Daiwa expressed cautious optimism about the company's prospects this year, saying its game sales momentum could pick up in February with Lunar New Year updates. NetEase is also expected to debut two highly anticipated titles, "Ananta" and "Sea of Remnants," later this year.
The company's management also called artificial intelligence a transformative multiplier rather than a disruption, seeking to address concerns about its impact on the industry after the recent launch of Google's Project Genie, a tool that generates 3-D interactive worlds with text prompts and images.
The company has already begun incorporating AI into its game production, and executives said NetEase's deep expertise, extensive data and vast developer talent put it in a good position to harness and unlock the technology's potential.
Citi raised its target price on NetEase to US$165.00 from US$161.00 following the results, calling it a defensive play as it leverages AI in gaming development. It also highlighted the company's diversified portfolio with rich game franchises.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
February 11, 2026 23:02 ET (04:02 GMT)
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