NetEase Shares Predicted to Rebound Despite New Chinese Online Gaming Regulations


  • NetEase (NASDAQ:) stock has declined by over 20% on a Friday.
  • Morgan Stanley analysts maintain a positive outlook, predicting a rise in the stock within the next sixty days.
  • Despite stricter gaming regulations in China, these experts believe that NetEase has a minimal revenue impact.
  • NetEase boasts a robust game pipeline headed into 2024 with Wilting Wind, Condor Heroes, and others.
  • Analysts at Morgan Stanley have put a $150 price target and an Overweight rating on this stock.

Morgan Stanley’s Predictions for NetEase

Despite NetEase (NASDAQ:) losing over 20% of its value, Morgan Stanley analysts anticipate an upward trend in its stocks during the coming two months. They communicated this sentiment in a note as a tactical idea call.

Factors Affecting NetEase Stock

Stocks plummeted after the introduction of stricter regulations in China, designed to restrict player expenditure on online gaming.

Outlook on NetEase by Morgan Stanley

However, the bank’s analysts have confidence in the share price’s future, projecting a rise over the next sixty days. They acknowledged the recent downturn but find the stock’s short-term valuation appealing. The discussions surrounding China’s new online games regulations are expected to lightly impact NetEase’s revenue, according to the bank.

NetEase’s Upcoming Projects

According to the banking giant, NetEase’s game pipeline is promising, with titles such as Where Winds Meet, Condor Heroes, Mission Zero, and Once Human coming soon. These future projects, along with a forecast of 15% game revenue and 20% operating profit growth in 2024, have the stock trading at 9-10x 2024E, based on Morgan Stanley’s estimates.

Final Say by Morgan Stanley

In conclusion, the bank sets a 70%-80% chance (or “very high likelihood”) of NetEase’s stock rising in the next two months. They have set a price target of $150 for NTES and assigned it an Overweight rating.

The impact of these developments on foreign exchange or trading seems significant. The assets affected might include NetEase’s shares themselves or other gaming-focused stocks, given the sector’s intricate interdependence. It’s thus crucial to track these situations and adapt trading strategies accordingly.

PIP Penguin