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Why NetEase, Inc. Surged 20% in February

Video game players

What happened

Shares of NetEase (NASDAQ: NTES) 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.

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Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends NetEase. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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