NTES
NetEase
China
★ Quality 52/100Price today
$119.29
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See what it is worthcharlieapp.co
What this business is made of
The business
A gaming machine that prints cash and doesn't owe a cent.
NetEase develops and operates video games for mobile and PC in China, its big cash register. It charges for in-game purchases and licensing; it rounds things out with streaming music (NetEase Cloud Music), education (Youdao), and commerce. The 64% gross margin tells the story.
Long-lived franchises like Fantasy Westward Journey have spent two decades retaining players and monetizing them nonstop. Making a game that lasts twenty years is rare; copying it, nearly impossible. But this isn't Tencent: the moat exists, without being impregnable.
Revenue history
From $13.6B to $16.1B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $16.1B · FY2025
Of every $100 in sales, $70 goes to costs and operations; $30 is left as net profit (30% margin).
Catalysts and risks
Approval of new game licenses by the Chinese regulator, freeing up held-back launches.
International expansion of titles to reduce dependence on China.
$6.7 billion in cash with zero debt: ammunition for buybacks and dividends.
The Chinese regulator can freeze licenses or limit gaming hours overnight.
VIE structure: you don't own the Chinese company, you own a contract in the Cayman Islands.
Excessive dependence on video games; a portfolio flop really hurts.
Charlie's note
“Paying 13x for a business with a 64% margin, no debt, and mountains of cash isn't crazy. The 4% growth is modest, but the price already assumes it with plenty of margin to spare.”
Analysis · June 2026
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