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Why NetEase, Inc. Surged 20% in February

By Joe Tenebruso - Mar 15, 2017 at 5:31PM

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The Chinese game maker continues to deliver new hits.

What happened

Shares of NetEase ( NTES 4.03% ) popped 20.1% last month, according to data provided by S&P Global Market Intelligence, as the Chinese internet technology company's strong fourth-quarter earnings report was applauded by investors.

Video game players

Image source: Getty Images.

So what

Revenue surged 53% year over year, to 12.099 billion Chinese renminbi (RMB), or roughly $1.74 billion. The gains were broad-based, with NetEase enjoying solid sales increases across its product lines.

"Led by mobile games, we saw year-over-year net revenue increases in the fourth quarter of 62.8% from online games, 9.2% from advertising services, and 38.2% from our email, e-commerce and others segment," said CEO William Ding in a press release.

Helping to fuel this growth is NetEase's impressive ability to pump out popular new games.

"With more than 40 new mobile titles in 2016, we have introduced a number of chart toppers to China's thriving mobile market," Ding said.

All told, adjusted net income was $4.30 per diluted American depositary share (ADS), representing year-over-year growth of 68%. In turn, NetEase's board of directors approved a nearly 30% increase in its quarterly dividend to $1.01 per share.

Now what

NetEase's shares have pulled back about 5% so far in March, but the stock still fetches about double what it did just one year ago. Long-term shareholders have been even more well  rewarded, with NetEase's stock up a dazzling 1,470% over the last decade. And with the already-massive global video game market likely to only grow larger in the coming decade, it appears more good times are ahead for NetEase -- and its investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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NetEase, Inc. Stock Quote
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