NetEase Rises 7% in a Month: Is the Stock a Portfolio Must Have?

Core Viewpoint - NetEase (NTES) has demonstrated strong performance in the gaming and Internet services sector, achieving a 6.6% increase in stock value over the past month, surpassing the industry average of 5.9% and outperforming peers like Red Violet, Criteo, and Globant [1][2]. Group 1: Financial Performance - The strong momentum in online gaming services and significant revenue growth in Q3 2024 contributed to NetEase's outperformance [2]. - In Q3 2024, net revenues from online games constituted approximately 96.8% of the segment's total net revenues, an increase from 96.1% in Q2 and 93.7% year-over-year [3]. - Mobile games accounted for about 70.8% of net revenues from online game operations in Q3 2024, down from 76.4% in Q3 2023 and 77.6% in Q2 2024 [3]. Group 2: Gaming Division Highlights - NetEase's gaming division is thriving, with popular titles experiencing impressive growth; PC games saw net revenues increase by approximately 29% year-over-year and 30% quarter-over-quarter [5]. - Legacy franchises like Fantasy Westward Journey and Westward Journey Online continue to attract players, with a new chapter introduced in Fantasy Westward Journey Mobile [6]. - NARAKA: BLADEPOINT celebrated its third anniversary, enhancing player engagement through new updates [7]. - Justice Mobile is redefining traditional MMOs with innovative features, including AI-driven NPCs and user-generated AI companies [8]. Group 3: Technological Innovations - NetEase is committed to technological advancements, with significant strides in AI-driven subscription services and tools that enhance user engagement [13][15]. - The AI model Ziyue achieved over 4 million users in its debut quarter, setting a new industry standard [11]. - Youdao Literature has launched AI-powered writing enhancement tools, leading to increased user engagement [12]. Group 4: International Expansion and Future Prospects - NetEase is expanding its international gaming footprint, with Justice Mobile set to launch in Hong Kong, Macau, and Taiwan, and Dunk City Dynasty on track for a global release [14]. - The company is intensifying its game pipeline with plans to unveil several highly anticipated titles in the coming months [14].