On August 26, NetEase declined 3.07% overnight, trading at $124.85/share, with turnover of $1.8766 million, as the preceding two-day rebound failed to sustain momentum.

The decline reflects continued fallout from NetEase's Q2 earnings released on August 20. While net revenue of 30.1 billion yuan and gaming revenue of 25 billion yuan both exceeded expectations, net profit attributable to shareholders came in at only 7 billion yuan, down 18.6% year-over-year. The shortfall was primarily driven by approximately 2.95 billion yuan in investment losses — compared to a net investment gain of 330 million yuan in the year-ago period — stemming from fair value declines in equity investments and impairment provisions. Additionally, the effective tax rate surged from 14.7% to 25.5%, adding roughly 900 million yuan in incremental tax expenses. Adjusted EPS of 12.02 yuan per ADS significantly missed the consensus estimate of 15.59 yuan. Despite Goldman Sachs, Bank of America, Citi, and Daiwa collectively raising target prices and maintaining buy ratings, and the Hang Seng Index inclusion set to take effect on September 14, profit-side pressure has continued to dominate near-term trading dynamics.

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