NetEase Stock Dips After Q4 Print: What's Going On?
Portfolio Pulse from Anusuya Lahiri
NetEase, Inc (NASDAQ:NTES) reported Q4 fiscal 2023 revenue of $3.82 billion, a 7.0% increase Y/Y but below the consensus of $3.94 billion. Adjusted EPADS was $1.60, missing the consensus of $1.71, causing the stock to slide. Games and related services revenue grew 9.6% Y/Y. Youdao, Inc (NYSE:DAO) saw a revenue increase of 1.8% Y/Y to $208.5 million, with a decline in gross margin. Cloud Music's revenues fell 16.4% Y/Y. Innovative businesses and other revenue grew 12.9% Y/Y. NetEase announced a dividend increase and reported $15.6 billion in cash and equivalents. VanEck Video Gaming And ESports ETF (NASDAQ:ESPO) has a 6% exposure to NetEase.
February 29, 2024 | 1:21 pm
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NEUTRAL IMPACT
Youdao, Inc reported a slight revenue increase but a decline in gross margin in Q4 fiscal 2023.
While Youdao reported revenue growth, the decline in gross margin could be a concern. However, the impact on stock price is uncertain without more context on investor expectations.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
VanEck Video Gaming And ESports ETF, with a 6% exposure to NetEase, has gained close to 10% year-to-date.
The ETF's performance is influenced by a diverse portfolio, not just NetEase. While NetEase's performance is a factor, the overall impact on ESPO is diluted by its other holdings.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 40
NEGATIVE IMPACT
NetEase reported lower than expected Q4 fiscal 2023 revenue and adjusted EPADS, leading to a stock price decline.
Missing revenue and earnings expectations typically leads to negative investor sentiment in the short term, causing stock prices to decline. The increase in dividend and strong cash position may mitigate some negative impact.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100