Morgan Stanley releases reportmariokartdx, downgraded Netease's investment rating in U.S. stocksmariokartdx, from "increase in holdings" to "keep pace with the market", and the ADR target price dropped from US$120 to US$100. The bank lowered its forecast for the stock's earnings per share from this year to 2026 by 6% to 12%. It expects game revenue and net profit to increase by 6% to 7% year-on-year this year and next.

The bank said that it had removed Netease from its preferred stock list in April based on seeing multiple risks. Netease has an estimated market share of about 50% for large-scale online role-playing games. Such games have the highest average revenue per user, but the market share of Mini games is increasing in China, and future game sales potential may be discounted. The bank also pointed out that Netease may face the problem of declining return on capital invested in the future, including low-cost clothing for the "Anti-Shuihan" mobile game and "Legend of the Condor Heroes", and providing 10 billion yuan for the "Anti-Shuihan" mobile game and "Egg Boy Party". Subsidy, adjust the monetization model for the end-game version of "Fantasy Westward Journey".

In response to Tencent's "Yuanmeng Star", Netease's sales and promotion costs soared in the fourth quarter of last year. The situation can be repeated when the new game "Glory of the King" was launched in the summer and when it competed with the mobile game "Eternal Destruction". The separate launch of mobile games and end-games of "Yanyun Sixteen Voices" also affected the market's expectations for the game flow.