NetEase’s stock tumble after second quarter earnings

NetEase Reports Second Quarter 2018 Unaudited Financial Results – NetEase, Inc

What happened: Chinese leading internet and online game services provider NetEase reported an unaudited profit of RMB 2.1 billion for the second quarter ended June 30, a 30% decrease compared with the same period last year. Online game services, the biggest segment of NetEase’s revenues, increased 6.7 percent compared with the second quarter of 2017, and e-commerce net revenues increased 75.2 percent.

Why it’s important: NetEase seems to be recovering from the unsatisfying earnings last quarter. In the first quarter, NetEase’s profit dropped 81%, compared with the first quarter of 2017 and now the decrease has narrowed to 30%. The increasing gaming revenues were mainly due to the strong performance of their existing games Chu Liu Xiang, Knives out and Identity V. kaola.com and Yanxuan, drove the growth of NetEase’s e-commerce segment. In the second quarter, Gaming made up 61.8% of the total revenues and e-commerce 27%.