NetEase Stock Drops on Weaker-Than-Expected Profits

NetEase (NTES) American depository receipts (ADRs) tumbled as the company’s second-quarter profit failed to meet expectations despite growing video game revenue.

The Chinese internet and games company posted a net income of 6.8 billion yuan (about $952 million), down 17% year-over-year and short of analysts’ expectations, per Visible Alpha. Revenue was 25.5 billion yuan (about $3.6 billion), up 6.1% year-over-year and just short of expectations. 

Despite Disappointing Profit, Games Drive Revenue Growth

Games and related value-added services drove revenue growth, which improved 6.7% to 20.1 billion yuan (2.8 billion). The company’s Naraka: Bladepoint title saw record daily active users (DAUs) on its third anniversary and Identity V also hit record DAUs in July and August. 

“With a growing portfolio of games that feature higher quality and cover more genres, we are thrilled to bring exciting NetEase gaming experiences to more players around the globe,” CEO William Ding said. “As we expand our reach to players in China and worldwide, innovation remains our priority.”

NetEase, the rival of technology and media giant Tencent (TME) in China, saw its ADRs fall more than 11% Thursday.