Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Why Shares of NetEase Inc. Surged Today

What happened

Shares of Chinese video game publisher and e-commerce specialist NetEase Inc. (NASDAQ: NTES) jumped on Monday following reports that the company was increasing its spending on foreign products to sell to Chinese consumers. The stock finished the day up 10.4%.

So what

NetEase's Kaola e-commerce business expects to buy about $11 billion worth of inventory from the U.S., Europe, and Japan over the next three years, with purchases from Australia and South Korea likely adding to that total. The company is looking to harness established international brands to grow its presence in the Chinese e-commerce market.

Image source: Getty Images.

About $3 billion will go to U.S. suppliers, $4.4 billion will go to Japanese suppliers, and $3.5 will go to European suppliers.

Kaola is already the leader in the cross-border e-commerce market in China, with a 24% share during the first half of this year. The company plans to open a new 300,000-square-meter warehouse to accommodate its expected growth.

Now what

The online game services segment is still NetEase's core business, generating $1.4 billion of revenue during the second quarter. E-mail, e-commerce, and other revenue totaled $494 million, with e-commerce sales making up an undisclosed chunk of that total.

With a plan to plow $11 billion into inventory over the next three years, NetEase's e-commerce segment is poised to become a larger part of the overall business. Given the stock's jump, investors seem on board.

10 stocks we like better than NetEase
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and NetEase wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of October 9, 2017

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NetEase. The Motley Fool has a disclosure policy.