NetEase (NASDAQ:NTES) Shares Gap Down on Disappointing Earnings

NetEase, Inc. (NASDAQ:NTES)’s share price gapped down before the market opened on Thursday following a dissappointing earnings announcement. The stock had previously closed at $127.25, but opened at $120.59. NetEase shares last traded at $121.2360, with a volume of 355,055 shares traded.

The technology company reported $1.80 earnings per share (EPS) for the quarter, missing the consensus estimate of $2.31 by ($0.51). NetEase had a return on equity of 21.04% and a net margin of 29.85%.The firm had revenue of $4.43 billion during the quarter, compared to analysts’ expectations of $4.33 billion.

Trending Headlines about NetEase

Here are the key news stories impacting NetEase this week:

• Positive Sentiment: NetEase declared a second-quarter 2026 cash dividend for Hong Kong shareholders, reinforcing its shareholder-return policy and potentially supporting investor sentiment. Terms of the dividend were not provided in the report. NetEase Declares Q2 2026 Cash Dividend for Hong Kong Shareholders
• Neutral Sentiment: NetEase Cloud Music (HKEX: 9899), an affiliated company, reported first-half revenue growth of about 3.4% and higher gross profit, but operating profit and adjusted net profit declined. The comparison was also affected by a large deferred-tax benefit recognized in the prior-year period, limiting the direct read-through to NTES. NetEase Cloud Music Inc. Reports First Half 2026 Financial Results
• Neutral Sentiment: NetEase-backed Youdao (NYSE: DAO) reported second-quarter revenue growth of 3.5% year over year to RMB1.5 billion. The update indicates continued expansion in the education and advertising business but provides limited information about NetEase’s core gaming performance. Youdao Reports Second Quarter 2026 Unaudited Financial Results
• Negative Sentiment: NetEase reported quarterly earnings of $1.80 per share, well below the $2.31 consensus estimate, even though revenue of $4.43 billion exceeded expectations of $4.33 billion. The earnings miss is likely the primary reason the stock moved lower, suggesting profitability or expense pressures outweighed the revenue beat. NetEase Quarterly Earnings Results

Wall Street Analysts Forecast Growth

A number of research firms have commented on NTES. Weiss Ratings cut NetEase from a “hold (c+)” rating to a “hold (c)” rating in a report on Tuesday, August 4th. Wall Street Zen cut NetEase from a “buy” rating to a “hold” rating in a research report on Sunday, August 2nd. Morgan Stanley reissued an “overweight” rating and set a $158.00 target price on shares of NetEase in a research note on Tuesday, May 26th. Benchmark reissued a “buy” rating on shares of NetEase in a report on Friday, May 22nd. Finally, Zacks Research downgraded NetEase from a “strong-buy” rating to a “hold” rating in a research note on Monday, July 27th. Seven research analysts have rated the stock with a Buy rating and three have issued a Hold rating to the company’s stock. Based on data from MarketBeat.com, NetEase currently has an average rating of “Moderate Buy” and an average target price of $158.38.

Insider Activity

In other news, General Counsel Paul William Boltz, Jr. sold 10,000 shares of the stock in a transaction that occurred on Monday, June 29th. The stock was sold at an average price of $128.30, for a total transaction of $1,283,000.00. Following the completion of the transaction, the general counsel directly owned 12,223 shares in the company, valued at approximately $1,568,210.90. This represents a 45.00% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. 54.70% of the stock is owned by company insiders.

Hedge Funds Weigh In On NetEase

A number of institutional investors and hedge funds have recently made changes to their positions in NTES. Mitsubishi UFJ Trust & Banking Corp grew its position in NetEase by 22.1% in the fourth quarter. Mitsubishi UFJ Trust & Banking Corp now owns 67,211 shares of the technology company’s stock worth $9,250,000 after acquiring an additional 12,173 shares in the last quarter. Lazard Asset Management LLC increased its stake in NetEase by 64.2% during the first quarter. Lazard Asset Management LLC now owns 581,720 shares of the technology company’s stock worth $65,118,000 after acquiring an additional 227,433 shares during the last quarter. NewEdge Wealth LLC raised its position in NetEase by 114.3% during the first quarter. NewEdge Wealth LLC now owns 48,068 shares of the technology company’s stock valued at $5,381,000 after purchasing an additional 25,634 shares during the period. Bank of America Corp DE raised its position in NetEase by 111.4% during the first quarter. Bank of America Corp DE now owns 1,325,317 shares of the technology company’s stock valued at $148,356,000 after purchasing an additional 698,318 shares during the period. Finally, Temasek Holdings Private Ltd lifted its stake in shares of NetEase by 50.7% in the 1st quarter. Temasek Holdings Private Ltd now owns 708,114 shares of the technology company’s stock valued at $79,266,000 after purchasing an additional 238,386 shares during the last quarter. 11.07% of the stock is owned by hedge funds and other institutional investors.

NetEase Trading Down 5.3%

The firm has a market capitalization of $77.17 billion, a P/E ratio of 16.02, a price-to-earnings-growth ratio of 1.62 and a beta of 0.73. The firm has a 50 day moving average price of $126.85 and a 200-day moving average price of $120.57.

About NetEase

NetEase, Inc (NASDAQ: NTES) is a Chinese technology company headquartered in Hangzhou that develops and operates Internet services and products. Founded in 1997 by William Ding (Ding Lei), the company has grown from an early web portal and e-mail provider into a diversified online services group. William Ding has served as the company’s founder and long-time leader, guiding its expansion into games, digital content and consumer services.

The company’s primary business is interactive entertainment: NetEase Games designs, develops and publishes PC and mobile games for domestic and international audiences, offering a mix of self-developed franchises and titles published under licensing and strategic partnerships.