NetEase Inc (NASDAQ:NTES), it’s important to remember, has been one of the most successful momentum names in the tech sector for most of the past decade, rallying from $25/share to well over $350/share into 2018. The stock is in its first serious correction in that time right now, and has dropped about a third of its market cap over the past ten months. So, as you can imagine, signs that it is starting to put together interesting new strategic arrangements may inspire some interesting new speculative energy.
It is in that context that we would suggest viewing its announcement on Monday of new collaboration with Blizzard Entertainment to co-develop the next game in the storied Diablo franchise, Diablo Immortal, a mobile massively multiplayer action-RPG for Android and iOS devices.
NetEase Inc (NASDAQ:NTES) frames itself as a company that operates an interactive online community in the People’s Republic of China.
The company operates through Online Game Services; E-Commerce; Advertising Services; and Email and Others segments. It offers various games in a range of genres through mobile devices and PCs, including role playing games, MMORPGs, battle arena games, simulation games, collectible card games, first-person shooter games, sandbox games, and other types of games to the Chinese market.
The company also operates Kaola that sells imported maternity and baby products, skincare and cosmetics, and other general merchandise; and Yanxuan, which sells its private label products, including apparel, homeware, kitchenware, and other general merchandise, as well as NetEase News App and NetEase Websites, which provide Internet users with Chinese language-based online services that are centered around content and interactive community.
In addition, it provides online advertising services comprising banner advertising, channel sponsorships, direct email, interactive media-rich sites, sponsored special events, games, contests, and other activities; and email services to individual and corporate users.
Further, NetEase, Inc. offers online services, such as CC, a live video streaming platform; Cloud Music, a music streaming platform; Wangyibao, a payment platform; EaseRead, an e-reading platform; NetEase Cloud Classroom, an online education platform; and Youdao Dictionary, an e-dictionary services platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is based in Beijing, the People’s Republic of China.
As noted above, NTES just announced a collaboration with Blizzard Entertainment to co-develop the next game in the storied Diablo franchise, Diablo Immortal, a mobile massively multiplayer action-RPG for Android and iOS devices.
The stock is up on the news. Overall, shares of NTES have rallied about 15% over the past week. That sets up an interesting context for the action tomorrow.
“We are very proud that Blizzard Entertainment has chosen us to help bring one of their largest game franchises to mobile,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “We consider this a huge opportunity to show the world, and particularly Western gamers, NetEase’s strong R&D capabilities. We take a very global view of our online games business, and Blizzard’s Diablo franchise truly embodies the sort of worldwide appeal that we strive for.”
NetEase Inc (NASDAQ:NTES) managed to rope in revenues totaling $2.6B in overall sales during the company’s most recently reported quarterly financial data – a figure that represents a rate of top line growth of 31%, as compared to year-ago data in comparable terms.
In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($7.3B against $4.5B).