RENO, Nev., May 08, 2026 (GLOBE NEWSWIRE) -- ITS Logistics, an Echo Global Logistics company, announced that major paint manufacturer Sherwin-Williams increased freight utilization by 11% through ITS's retail store delivery solution — delivering 56 million pounds of freight to nearly 400 retail locations across the U.S. The solution has enabled Sherwin-Williams to scale peak season capacity while ensuring the brand's strict driver and operational standards are upheld by an external transportation provider.
"Drivers are usually pulling a blue Sherwin-Williams trailer. That's a 48-foot billboard going down the road,” said Ted Taxon, Regional Transportation Manager at Sherwin-Williams. “It's incredibly important to have a partner that recognizes and reflects the same standard as our Sherwin team.”
Sherwin-Williams operates a private contracted fleet to move freight across its nationwide network of manufacturing facilities, distribution centers, and retail locations. When spring arrives, peak season challenges fleet capacity at their Reno distribution center (DC), which services the West Coast, Pacific Northwest, and into Arizona, Idaho, and Utah. For the past two years, ITS has served as a seamless extension of Sherwin-Williams' private fleet, supporting outbound capacity when demand spikes and delivering directly to Sherwin-Williams stores and retail partners.
"When Sherwin-Williams reaches out, the expectation for us is to get equipment on-site the same day and deliver by the following day,” said Matthew Cooper, Division Manager of Retail at ITS Logistics. “Today, roughly 90% of the loads we manage are delivered within 24 hours of when the store originally expected them, which protects delivery timelines and prevents stockouts during their busiest season of the year.”
ITS Logistics’ store delivery solution addresses the most demanding fulfillment challenges for private fleets: balancing strict brand and driver standards with cost-effective implementation of purchased transportation support. Asset-based providers lack the speed and flexibility Sherwin-Williams needs to cover variable freight volumes when the company’s private fleet is at capacity. Fully brokered solutions can move quickly and are more cost-effective, but struggle to ensure carriers are indistinguishable from private fleet drivers. Multi-stop, high-touch freight presents its own challenges, and Sherwin-Williams requires drivers to be experienced in navigating tight shopping centers and customer-facing retail environments.
ITS Logistics ensures all these expectations are met, handling carrier dispatch, driver briefing, store notification, ETA communication, and proactive delay advisement for every covered shipment.
“Our asset-lite model is key to the success of this high-service solution,” said Josh Allen, Chief Commercial Officer at ITS Logistics. “Drawing from our premium carriers and injecting ITS-owned assets already running on Sherwin-Williams’ lanes enables us to eliminate repositioning, backhaul, and capacity ceilings — ensuring speed and reducing costs so the solution is financially viable and complementary to Sherwin-Williams’ private fleet.”
Key results from the partnership include:
56 million pounds of freight delivered to Sherwin-Williams store locations by ITS carrier partners in 2025, with an additional 11.7 million pounds already moved in early 2026.11% increase in outbound freight volumes from the Reno distribution center during the 2025 peak season, raising total freight utilization from 71.7% to 82.7%.Approximately 400 locations served, encompassing 90% of all Sherwin-Williams stores and retail partners within the Western United States.
"Purchased transportation could sometimes be construed as a necessary evil. I don't look at it that way. I look at it as building a partnership — one that gives us the flexibility to maintain a consistent fleet of drivers and increase capacity when there’s demand,” Taxon continued. “At the end of the day, this has been a successful partnership, and we will continue to utilize each other's strengths and needs as best we can to benefit both parties.”
ITS Logistics provides store delivery solutions for major retailers in the consumer goods and home improvement industries. To learn more about ITS Logistics' store delivery capabilities, visit here.
About Echo Global Logistics
Echo Global Logistics, Inc. is a leading provider of technology-enabled transportation and supply chain management services. Headquartered in Chicago with more than 60 locations across North America, Echo offers freight brokerage and Managed Transportation Solutions across all major modes including Truckload, Partial Truckload, LTL, Intermodal, Cross-Border, Food-Grade and Temperature-Controlled shipping and warehousing, and Warehouse Services. Echo leverages its proprietary technology platform—including automation, machine learning, and AI-driven decision support—to help customers optimize transportation performance, improve visibility, and simplify supply chain execution across complex supply chains. For more information on Echo Global Logistics, visit: www.echo.com.
About ITS Logistics
ITS Logistics, an Echo Global Logistics company, is one of North America’s fastest-growing, asset-based modern 3PLs, providing solutions for the industry’s most complicated supply chain challenges. With a people-first culture committed to excellence, the company relentlessly strives to deliver unmatched value through best-in-class service, expertise, and innovation. The ITS Logistics portfolio features North America’s #16 asset-lite freight brokerage, a top drayage and intermodal solution, an asset-based dedicated fleet, an innovative cloud-based technology ecosystem, and a nationwide distribution and fulfillment network.
About The Sherwin-Williams Company
Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paint, coatings and related products to professional, industrial, commercial and retail customers. The Company manufactures products under well-known brands such as Sherwin-Williams®, Valspar®, HGTV HOME® by Sherwin-Williams, Dutch Boy®, Krylon®, Minwax®, Thompson's® WaterSeal®, Cabot®, Suvinil® and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 5,400 Company-operated stores and branches, while the Company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers and industrial distributors. The Sherwin-Williams Performance Coatings Group supplies a broad range of highly-engineered solutions for the construction, industrial, packaging and transportation markets in more than 120 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW). For more information, visit www.sherwin.com.
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/68144c74-26e4-452a-916f-77b3dd82e78a
Sherwin-Williams Increases Freight Utilization by 11% with Retail Store Delivery Solution by ITS Log... Partnership proves private fleets can improve utilization, protect brand standards, and scale for pe...
On May 13, 2026, we delve into the DCF analysis for Sherwin-Williams Co SHW , a company that has experienced a challenging price performance recently, with a year-to-date decline of 3.6% and a one-year drop of 11.7%. Below are some key highlights from our analysis:
DCF Earnings-based intrinsic value of $218.38 vs current price of $311.58 (margin of safety: -42.7%) DCF FCF-based intrinsic value of $167.65 vs current price (second opinion, margin of safety: -85.8%) GF Score™ of 90/100, indicating a high reliability of the DCF inputs What Is SHW Worth? DCF Earnings-Based Model The DCF earnings-based model for Sherwin-Williams Co SHW employs a two-stage approach to estimate intrinsic value. In the first stage, we project earnings growth over the next ten years, followed by a terminal phase to account for long-term growth expectations. The assumptions used in this model are as follows:
Parameter Value Current EPS (TTM, excl. non-recurring) $11.55 10-Year Growth Rate 12.5% 10-Year Treasury Rate 4.33% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In the first stage, we assume that EPS will grow at a rate of 12.5% per year for the next ten years, discounted at a rate of 11%. The estimated value from this growth stage is $124.44 per share. In the second stage, we apply a terminal growth rate of 4% for the following ten years, also discounted at 11%, yielding a terminal stage value of $93.94 per share. The summary of these calculations is as follows:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 12.5%, discounted at 11% $124.44 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $93.94 Intrinsic Value Growth + Terminal $218.38 With the current price at $311.58, the intrinsic value of $218.38 indicates that the stock is modestly overvalued, with a margin of safety of -42.7%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research shows stock prices correlate more closely with earnings than free cash flow. For further details, you can explore the SHW DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF) based DCF model provides an alternative perspective on the intrinsic value of Sherwin-Williams Co SHW , yielding an intrinsic value of $167.65. When comparing this FCF-based valuation with the earnings-based intrinsic value of $218.38, we observe a significant discrepancy. Both models indicate that the stock is modestly overvalued, with the FCF model showing a margin of safety of -85.8%.
How Does GF Value™ Compare to the DCF Models? The GF Value™ of Sherwin-Williams Co SHW is calculated at $352.88, providing a third valuation perspective. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. While the DCF earnings model suggests overvaluation, the GF Value™ indicates that the stock is undervalued. This divergence among the three models highlights the importance of considering multiple valuation methods. For more insights, visit the GF Value™ page.
What Does SHW's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been found to generate higher long-term returns based on backtesting from 2006 to 2021. Below is a summary of SHW's GF Score™ metrics:
Metric Rating GF Score™ 90/100 Financial Strength 5/10 Profitability 9/10 Growth 8/10 Valuation 10/10 Momentum 7/10 With a predictability rank of 2/5 stars, the reliability of the DCF model for this stock is lower, suggesting caution in the interpretation of the DCF estimates. For more information, visit the SHW stock page.
Key Assumptions and Limitations It is crucial to recognize that DCF models are highly sensitive to growth rate and discount rate assumptions. Stocks with low predictability ratings, such as Sherwin-Williams Co SHW , produce less reliable DCF estimates. Additionally, the terminal growth rate of 4% is a simplifying assumption that may not accurately reflect future economic conditions.
What This Means for Investors In summary, the DCF earnings-based model suggests that Sherwin-Williams Co SHW is modestly overvalued at a price of $311.58 compared to the intrinsic value of $218.38. The FCF-based model reinforces this view, indicating a significant overvaluation with an intrinsic value of $167.65. However, the GF Value™ presents a contrasting perspective, suggesting the stock is undervalued at $352.88. Overall, the consensus across the three models indicates that SHW is overvalued. For the full DCF analysis, visit the SHW DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is SHW's intrinsic value based on DCF?
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Cans of Dulux paint, an AkzoNobel brand, are seen on the shelf of a DIY retail store in Manchester, Britain, June 14, 2024. REUTERS/Phil Noble Purchase Licensing Rights, opens new tab
CompaniesMay 27 (Reuters) - Dulux paint maker AkzoNobel (AKZO.AS), opens new tab struck down a €12.5 billion ($14.6 billion) cash takeover offer from rivals Nippon Paint (4612.T), opens new tab and Sherwin-Williams (SHW.N), opens new tab on Wednesday, sending its shares 20% higher.
The offer price of €73 per share represented a premium of 39% to AkzoNobel's last closing price of €52.52 per share. The shares jumped to €63 by 1241 GMT, firmly on track for their best trading day since at least October 2008.
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Graph shows AkzoNobel share price close over the past 3 yearsAkzoNobel said the non-binding proposal undervalued its business, lacked deal certainty regarding regulatory clearances and would have split the company between the two suitors.
The Dutch company's board continues to recommend the planned merger with U.S. coatings maker Axalta (AXTA.N), opens new tab.
The planned merger, which shareholders are set to vote on in early July, would create a combined coatings company with an enterprise value of $25 billion, led by AkzoNobel CEO Greg Poux-Guillaume. The deal is expected to close in late 2026 or early 2027.
The two parties have said the merged entity would deliver $600 million in annual cost savings, most of them within the first three years.
DEAL OR NO DEAL?Under the rejected proposal, Nippon Paint would have acquired AkzoNobel and retained its decorative paints and industrial coatings businesses, while selling its automotive, marine and powder coatings divisions to Sherwin-Williams.
Nippon Paint Group and Sherwin‑Williams said in light of Azko's decision, the two companies "were considering their next steps, if any" and added they believe their proposal offered significant strategic benefits to AkzoNobel's businesses.
The joint proposal did not include any financing conditions and is not subject to approval from Sherwin-Williams and Nippon Paint shareholders, the companies said.
"Neither proposal qualified as a 'potentially superior' offer, compared to the Axalta merger," an AkzoNobel spokesperson said.
AkzoNobel's comments seem to suggest the proposal was rejected due to its price, brokerage MKI said in a note to investors, while noting the consortium could have deliberately timed its approach for when the share price was low.
"The hint here is probably that the consortium has more up its sleeve," MKI analysts wrote.
AkzoNobel had rejected a similar offer by Pittsburgh-based PPG Industries (PPG.N), opens new tab in 2017.
A hostile approach would be complicated by AkzoNobel's stichting, a Dutch legal entity designed as an anti-takeover mechanism, which holds 48 priority shares worth 400 votes each.
AkzoNobel's stichting is firmly committed to the Axalta merger, so if shareholders were to terminate that deal, the stichting could block the takeover bid and leave the company with no deal at all, MKI explained.
Therefore, Nippon Paint and Sherwin-Williams would likely need to offer a very high price and deep commitments to sway the company's board to abandon the existing plan, the analysts said.
Bank of America is advising Nippon Paint Group financially, with A&O Shearman as legal counsel. Sherwin-Williams has appointed Citi as its financial adviser, while Weil, Gotshal & Manges LLP and Stibbe are acting as its legal advisers.
($1 = 0.8593 euros)
Reporting by Dimitri Rhodes in Gdansk; Additional reporting by Katha Kalia in Bengaluru, editing by Milla Nissi-Prussak
Our Standards: The Thomson Reuters Trust Principles., opens new tab
Shares of AkzoNobel surged on Wednesday after the Dutch paints and coatings maker disclosed that it had rejected a €12.49 billion ($14.53 billion) takeover proposal from Japan’s Nippon Paint Holdings and US-based Sherwin-Williams.
The stock climbed as much as 17% in early European trading to 61.38 euros, wiping out losses accumulated earlier this year, after investors reacted positively to the premium implied in the rejected proposal.
AkzoNobel said the indicative proposal valued the company at 73 euros per share, representing a 39% premium to Tuesday’s closing price of 52.52 euros.
The company revealed that the proposed transaction involved Nippon Paint launching an all-cash offer for AkzoNobel before splitting parts of the business with Sherwin-Williams after completion.
Under the structure outlined by AkzoNobel, Nippon Paint would retain the company’s decorative paints and industrial coatings operations.
Sherwin-Williams, meanwhile, would separately acquire AkzoNobel’s automotive and specialty coatings businesses, as well as its marine and protective coatings and powder coatings units.
AkzoNobel said it rejected the proposal on May 1 and had also turned down an earlier approach made on April 22.
“Neither proposal qualified as a ‘potentially superior’ offer, compared to the Axalta merger,” a company spokesperson told Reuters.
The company reiterated that both its management board and supervisory board continue to unanimously support the planned merger with US coatings company Axalta Coating Systems.
Brokerage KBC also said AkzoNobel remained committed to the Axalta transaction.
“Akzo considers its own merger proposal with Axalta to be superior and pushes ahead on this track,” KBC analysts wrote in a note.
Axalta merger remains central strategyAkzoNobel and Axalta announced their all-stock merger agreement in November, aiming to create a global coatings giant with a combined enterprise value of roughly $25 billion.
The merged entity is expected to be led by AkzoNobel Chief Executive Greg Poux-Guillaume and initially maintain dual listings in Amsterdam and New York.
The companies expect the transaction to close in late 2026 or early 2027.
AkzoNobel and Axalta have projected annual cost savings of approximately $600 million within three years of completing the merger, with around 90% of the synergies expected during that period.
The combined business would operate across more than 160 countries, significantly expanding its scale in industrial, automotive and decorative coatings markets.
Still, the Axalta merger has faced resistance from some shareholders since its announcement, amid questions over valuation and integration risks.
The takeover interest also comes against the backdrop of increasing consolidation pressure within the global coatings industry.
Last year, activist investor Cevian Capital disclosed a 5% stake in AkzoNobel and backed strategic changes at the company.
Cevian has historically pushed European companies toward mergers, breakups or acquisitions to unlock shareholder value.
However, CEO Greg Poux-Guillaume previously said Cevian was not involved in the decision to merge with Axalta.
Axalta itself has a substantial presence in industrial and automotive coatings markets.
The company generated around $5.3 billion in net sales in 2024, including strong contributions from refinish coatings, industrial coatings and vehicle OEM mobility coatings businesses.
AkzoNobel’s own performance coatings division, which spans automotive, marine, powder and industrial coatings applications, generated roughly €6.4 billion in third-party revenue last year.
The emergence of rival bidders highlights the strategic value of AkzoNobel’s assets at a time when coatings manufacturers are increasingly seeking scale, cost efficiencies and stronger global positioning amid uncertain economic conditions and fluctuating raw material costs.
, /PRNewswire/ -- Nippon Paint Group and Sherwin-Williams note today's press release issued by AkzoNobel regarding their proposal to acquire all of the issued and outstanding shares of AkzoNobel (the "Joint Proposal"). The Joint Proposal was rejected by the Boards of AkzoNobel, and Nippon Paint Group and Sherwin-Williams are considering their next steps, if any.
Nippon Paint Group and Sherwin-Williams carefully considered AkzoNobel's all-stock merger with Axalta announced on 18 November 2025, which set out an alternative path to AkzoNobel's standalone strategy. Nippon Paint Group and Sherwin-Williams thoroughly assessed options for engaging with AkzoNobel at this pivotal moment, in accordance with the terms of AkzoNobel's existing merger agreement with Axalta, and jointly submitted the comprehensive Joint Proposal to the Boards of AkzoNobel for a recommended public offer for AkzoNobel, taking the interests of all stakeholders of AkzoNobel into account. The Joint Proposal does not include any financing conditions and is not subject to Sherwin-Williams or Nippon Paint shareholders' approvals. The Joint Proposal submitted on 29 April 2026 followed a previous offer on 16 April 2026.
Nippon Paint Group and Sherwin-Williams expressed to the Boards of AkzoNobel their desire to enter into constructive discussions with AkzoNobel about the Joint Proposal, but AkzoNobel informed Nippon Paint Group and Sherwin‑Williams that its Boards rejected the Joint Proposal. In light of this decision, Nippon Paint Group and Sherwin‑Williams are considering their next steps if any.
The Joint Proposal envisages the acquisition of AkzoNobel's Decorative Paints and Industrial Coatings business ("Deco") by Nippon Paint Group and the acquisition of AkzoNobel's Marine & Protective Coatings, Automotive & Specialty Coatings and Powder Coatings businesses ("Coatings") by Sherwin-Williams.
Nippon Paint Group and Sherwin-Williams have assessed and taken into account the interests of all AkzoNobel stakeholders and firmly believe that the Joint Proposal offers significant strategic benefits to AkzoNobel's businesses. Both the Deco and Coatings businesses would become part of robust global platforms offering greater access to incremental resources and capital that would allow them to prosper and accelerate growth. Both combinations would provide AkzoNobel's businesses with clear strategic ownership with sustainable, successful business peers, with full respect for AkzoNobel's heritage, identity and businesses.
For Nippon Paint Group, the potential acquisition of AkzoNobel's Deco business would further strengthen its decorative paints portfolio, including the reunification of the Dulux brand on a global basis, while accelerating international growth across key markets.
For Sherwin-Williams, the potential acquisition of AkzoNobel's Coatings business would complement Sherwin-Williams's existing portfolio and enhance its position in certain specific premium coatings segments where Sherwin-Williams currently has limited presence.
Nippon Paint Group and Sherwin-Williams will provide further updates as appropriate and in accordance with applicable laws and regulations.
Bank of America is acting as financial advisor and A&O Shearman is serving as legal advisor to Nippon Paint Group. Citi is acting as financial advisor, and Weil, Gotshal & Manges LLP and Stibbe are both serving as legal advisors to Sherwin-Williams.
About Nippon Paint Group
Nippon Paint Group is a global leader in paint and adjacencies businesses—No. 1 in Asia and No. 4 worldwide—delivering innovative solutions that create high added value for customers. Headquartered in Japan, we accelerate growth through our unique Asset Assembler model built on two pillars: expanding our existing businesses and actively seeking M&A opportunities. With operations spanning 48 regions, we leverage strong brands and high-quality solutions to strengthen our competitive position in each market and continuously expand market share, driven by an unrelenting ambition to grow.
About The Sherwin-Williams Company
Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paint, coatings and related products to professional, industrial, commercial, and retail customers. The Company manufactures products under well-known brands such as Sherwin-Williams®, Valspar®, HGTV HOME® by Sherwin-Williams, Dutch Boy®, Krylon®, Minwax®, Thompson's® WaterSeal®, Cabot®, Suvinil® and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through more than 5,400 Company-operated stores and branches, while the Company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Performance Coatings Group supplies a broad range of highly-engineered solutions for the construction, industrial, packaging and transportation markets in more than 120 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW). For more information, visit www.sherwin.com.
For more information
Nippon Paint Group
Media contact
Rene Loman
Spokesperson
[email protected]
+31 6 5185 2226 (direct)
Investor relations contact
Ryosuke Tanaka
Corporate Officer - General Manager, Investor Relations,
Sustainability and Public Relations
This communication contains forward-looking statements within the meaning of the U.S. securities laws. Such forward-looking statements can sometimes be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "potential," "seeks," "intends," "plans," "estimates," "anticipates" or other comparable terms or negatives of these terms, but not all forward-looking statements include such identifying words. Forward-looking statements in this communication include, but are not limited to, statements regarding the potential acquisition of AkzoNobel by Nippon Paint Group and the potential acquisition of certain AkzoNobel businesses by Sherwin-Williams, the anticipated benefits and strategic rationale of any such transaction, the willingness or intention of Nippon Paint Group and Sherwin-Williams to enter into discussions with the boards of AkzoNobel, the expected scope and structure of any such transaction (including Sherwin-Williams's proposed acquisition of certain AkzoNobel businesses), and whether the Joint Proposal may constitute a superior proposal under the terms of AkzoNobel's existing merger agreement with Axalta.
You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.
Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, without limitation: AkzoNobel's willingness to engage in discussions regarding the Joint Proposal; the ability of Nippon Paint Group and Sherwin-Williams to negotiate and enter into definitive agreements with AkzoNobel on acceptable terms or at all; the outcome and timing of any due diligence process; the terms and conditions of AkzoNobel's existing merger agreement with Axalta, including any matching rights, termination fees or other provisions that may affect the feasibility, timing or terms of the Joint Proposal; AkzoNobel's evaluation of whether the Joint Proposal constitutes a superior proposal under the terms of its existing merger agreement with Axalta; the ability to obtain required regulatory approvals from governmental authorities in applicable jurisdictions, and the terms, conditions, timing or remedies associated with any such approvals; the ability of Nippon Paint Group and Sherwin-Williams to coordinate and execute such transactions; the possibility that competing offers or acquisition proposals may be made; general economic, market and industry conditions; and the other risks and uncertainties described in Sherwin-Williams's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the "SEC").
Nippon Paint Group and Sherwin-Williams have not made any decision to make or participate in any binding offer to acquire AkzoNobel. No assurance can be given that any transaction will be proposed, that the parties will enter into any definitive agreement providing for any such transaction, or the terms or timing of any transaction.
Nippon Paint Group and Sherwin-Williams caution you not to place undue reliance on any of these forward-looking statements, as they are not guarantees of future performance or outcomes. Except as required by applicable law, none of Sherwin-Williams, Nippon Paint Group or any of their respective affiliates assumes any obligation to update or revise any forward-looking statement contained herein, whether as a result of new information, future events or otherwise.
Further, this communication does not constitute an offer to buy or a solicitation of an offer to sell securities. This communication is not a substitute for any proxy statement, offer to purchase, or other document that may be delivered to AkzoNobel securityholders in connection with a proposed transaction, should one be entered into. Investors and securityholders of AkzoNobel are urged to read offer documents carefully in their entirety if and when they become available as they will contain important information about the proposed transaction.
A month has gone by since the last earnings report for Sherwin-Williams (SHW - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sherwin-Williams due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sherwin-Williams' Q1 Earnings Top Estimates, Sales Rise Y/Y on Suvinil BuyoutSherwin-Williams reported first-quarter 2026 earnings of $2.15 per share, up 7.5% from the year-ago quarter figure of $2.
Barring one-time items, earnings were $2.35 per share. The bottom line beat the Zacks Consensus Estimate of $2.24, delivering a positive earnings surprise of 4.9%.
Revenues were $5.67 billion, up 6.8% year over year and ahead of the Zacks Consensus Estimate of $5.57 billion. Net income rose 6.1% to $534.7 million, representing 9.4% of net sales, as management pointed to growth initiatives and share gains despite soft demand conditions. Sherwin-Williams attributed the improvement primarily to higher sales and moderating raw material costs, partially offset by the dilutive impact of the Suvinil acquisition.
Selling, general and administrative expenses rose to $1.97 billion or 34.8% of net sales compared with 33.8% in the prior-year quarter. EBITDA climbed 8.8% to $998.2 million.
Segmental ReviewPaint Stores Group’s net sales increased 3.7% year over year to $3.05 billion. Same-store sales rose to 2.4%, and segment profit grew 3.3% to $558.8 million, with a reported segment margin of 18.3%.
Consumer Brands Group net sales jumped 19.2% to $908.3 million, driven mainly by the Suvinil acquisition, a 2.4% favorable foreign currency translation impact and higher sales in Europe, partly offset by softer DIY demand in North America. Segment profit surged 49.5% to $197.2 million, with a reported segment margin of 21.7%, while adjusted segment profit was $212.8 million and adjusted segment margin was 23.4%.
Performance Coatings Group net sales rose 6.5% to $1.71 billion, aided by a 4.1% favorable foreign currency translation impact and low-single-digit volume growth. Segment profit increased 9.3% to $232.4 million, taking the reported segment margin to 13.6%, while adjusted segment profit increased to $281.5 million and adjusted segment margin held at 16.5%.
Sherwin-Williams witnessed heightened global uncertainty and continued softness across most end markets. The growth investments and a focus on winning new accounts and expanding share of wallet supported results in the reported quarter. Targeted price increases by end market and geography, paired with cost-out actions, were employed to limit the burden of inflation on customers. These geopolitical events and potential inflation tied to raw materials, energy, logistics and packaging remain swing factors as 2026 progresses.
Cash Returns and Balance SheetSherwin-Williams generated $139.1 million in net operating cash flow in the quarter. The company returned $772.7 million to shareholders through dividends and share repurchases, including the buyback of 1.6 million shares in the reported quarter.
As of March 31, 2026, cash and cash equivalents were $216.9 million. The company reported short-term borrowings of $2.38 billion and long-term debt of $9.32 billion, while noting it had remaining authorization to repurchase 28 million shares through open market purchases.
OutlookFor the second quarter of 2026, Sherwin-Williams expects consolidated net sales to be up a mid-single-digit percentage versus the second quarter of 2025. The company reiterated that it continues to anticipate little to no recovery in most end markets this year based on customer sentiment and the leading indicators it monitors.
For full-year 2026, Sherwin-Williams reaffirmed earnings guidance of $10.70-$11.10 per share and adjusted earnings guidance of $11.50-$11.90, while maintaining an effective tax rate expectation in the low 20% range and projecting net sales growth of a low to mid-single-digit percentage versus 2025.
How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision.
VGM ScoresCurrently, Sherwin-Williams has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sherwin-Williams has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zillow (ZG 2.51%) (Z 2.05%) stock is hovering around a three-year low. This follows the company's delivery of weak guidance with a forecast for a flat housing market in the second half of the year, even when factoring in a slower-than-expected start to the year.
Here's a look at why the housing market is under pressure, and at three stocks that can reward patient investors.
Image source: Getty Images.
The housing market is a textbook example of supply and demand. Supply is influenced by housing availability, from existing homes and new builds, which are impacted by zoning and tax laws. Demand fluctuates based on interest rates, lending options, employment, and housing prices relative to the median household income.
Housing prices surged early in the pandemic as 30-year mortgage interest rates fell to multi-decade lows. But those prices have stayed high even as mortgage rates have climbed far above pre-pandemic levels:
US Existing Home Median Sales Price data by YCharts.
The Case-Shiller U.S. National Home Price Index tracks changes in the value of single-family U.S. homes, similar to how stock market indexes like the S&P 500 and the Dow Jones Industrial Average measure changes in a basket of stocks. As you can see in the above chart, the Case-Shiller index and the median sales price of an existing U.S. home surged in the early 2000s, then pulled back during the Great Recession, but both have rapidly recovered over the last 15 years.
However, housing affordability is now at multi-decade lows, because housing prices have risen significantly faster than household incomes. A value of 100 on the Fixed Housing Affordability Index means that a family with a median household income can qualify for a mortgage on a median home price with a 20% down payment. Historically, the vast majority of households could qualify, but the value fell below 100 in recent years:
US Fixed Housing Affordability Index data by YCharts.
The index would likely be even lower if it focused only on potential first-time homebuyers, as it's somewhat inflated by including existing homeowners, who tend to have higher down payments.
Aside from lowering mortgage interest rates and raising household incomes, another way to make housing more affordable is to increase supply. But as you can see in the following chart, U.S housing starts have flatlined while U.S. existing home sales are near multi-decade lows:
US Housing Starts data by YCharts.
This means that developers aren't building new units fast enough, and existing homeowners aren't rushing to sell their homes, which reduces supply. Throw in the inflationary pressure of higher oil prices, and it's understandable that housing demand remains constrained.
The growth play Zillow thrives when homes are rapidly changing hands in a hot housing market. But it's proving that it can still generate strong results even during a slowdown.
The company has a highly valuable database that connects real estate professionals, buyers, sellers, and renters. It sells software, tools, and advertising options to industry professionals, agents, and property management companies looking to reach potential customers. Zillow Home Loans offers financing for home purchases.
However, traffic to Zillow's mobile apps and site was down 3% year over year in its latest quarter. Since the platform is free, Zillow still has a massive user base, with 220 million average monthly unique users. Despite the slower traffic, revenue jumped 18%, and the company is now consistently profitable.
For long-term investors looking for a growth stock poised to recover in lockstep with the housing market, Zillow looks like a great buy.
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32.03
The income and value play Home Depot (HD +0.73%) is the largest home-improvement retailer in the world. But because it operates exclusively in the U.S., Canada, and Mexico (with the vast majority of its business in the U.S.), the company is extremely sensitive to consumer spending and the U.S. housing market.
When interest rates are low and household incomes are rising, folks may be more inclined to improve their existing home or to buy a home that needs improvements. Home Depot has been in a multiyear slowdown because its customers are putting off big-ticket home improvement projects.
In the latest quarter, the average ticket rose 2.2% while overall transaction volume fell 1.3%. Home Depot's operating margins have been ticking down, and revenue is growing at a relatively low rate.
However, Home Depot is a coiled spring for a recovery in the housing market, because the company continues to build new stores, reinnovate existing stores, and expand its contractor business to diversify its revenue stream.
Home Depot also has a history of 18 consecutive years of dividend raises, and currently yields a sizable 3%. That makes it a top choice for dividend stock investors.
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The balanced play You may be familiar with Sherwin-Williams (SHW +0.13%) through either its own stores or its channel partners like Lowe's Companies that sell Sherwin-Williams-branded products. You might also know its other company-owned brands, such as Valspar paints and coatings, Cabot wood care and stain products, or Krylon spray paint. Sherwin-Williams also has a sizable performance coatings division, which made up 29% of 2025 sales.
A good chunk of its retail business is commercial and industrial -- not residential. It also has a significant international segment, making it less dependent on U.S consumers.
Today's Change
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%) $
0.41
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317.30
As a result, Sherwin-Williams has been less affected by the housing-market slowdown than Zillow and Home Depot, with strong margins and all-time-high sales. Its growth has allowed it to steadily repurchase a ton of stock and boost its dividend for 47 consecutive years, including some massive raises that have nearly tripled the dividend over the last decade:
SHW Revenue (TTM) data by YCharts.
Sherwin-Williams does have a premium valuation compared to Home Depot, and a far lower yield at just 1%. But for investors looking for a stock that benefits from a strong housing market, it's a solid buy, and it's less of a pure play than Zillow and Home Depot.
, /PRNewswire/ -- Nippon Paint Group and Sherwin-Williams today announced that they have decided to end their efforts to jointly acquire AkzoNobel.
The decision follows AkzoNobel's previously disclosed rejection of both joint all-cash offers put forward by Nippon Paint and Sherwin-Williams.
About Nippon Paint Group
Nippon Paint Group is a global leader in paint and adjacencies businesses—No. 1 in Asia and No. 4 worldwide—delivering innovative solutions that create high added value for customers. Headquartered in Japan, we accelerate growth through our unique Asset Assembler model built on two pillars: expanding our existing businesses and actively seeking M&A opportunities. With operations spanning 48 regions, we leverage strong brands and high-quality solutions to strengthen our competitive position in each market and continuously expand market share, driven by an unrelenting ambition to grow.
About The Sherwin-Williams Company
Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paint, coatings and related products to professional, industrial, commercial, and retail customers. The Company manufactures products under well-known brands such as Sherwin-Williams®, Valspar®, HGTV HOME® by Sherwin-Williams, Dutch Boy®, Krylon®, Minwax®, Thompson's® WaterSeal®, Cabot®, Suvinil® and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 5,400 Company-operated stores and branches, while the Company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Performance Coatings Group supplies a broad range of highly-engineered solutions for the construction, industrial, packaging and transportation markets in more than 120 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW). For more information, visit www.sherwin.com.
For more information
Nippon Paint Group
Media contact
Rene Loman
Spokesperson
[email protected]
+31 6 5185 2226 (direct)
Investor relations contact
Ryosuke Tanaka
Corporate Officer - General Manager, Investor
Relations, Sustainability and Public Relations
This communication contains forward-looking statements within the meaning of the U.S. securities laws. Such forward-looking statements can sometimes be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "shall," "should," "would," "could," "potential," "seeks," "intends," "plans," "estimates," "anticipates" or other comparable terms or negatives of these terms, but not all forward-looking statements include such identifying words. Forward-looking statements in this communication include, but are not limited to, statements regarding the potential acquisition of AkzoNobel by Nippon Paint Group and the potential acquisition of certain AkzoNobel businesses by Sherwin-Williams, the anticipated benefits and strategic rationale of any such transaction, the willingness or intention of Nippon Paint Group and Sherwin-Williams to enter into discussions with the boards of AkzoNobel, the expected scope and structure of any such transaction (including Sherwin-Williams's proposed acquisition of certain AkzoNobel businesses), and whether the Joint Proposal may constitute a superior proposal under the terms of AkzoNobel's existing merger agreement with Axalta.
You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.
Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, without limitation: AkzoNobel's willingness to engage in discussions regarding the Joint Proposal; the ability of Nippon Paint Group and Sherwin-Williams to negotiate and enter into definitive agreements with AkzoNobel on acceptable terms or at all; the outcome and timing of any due diligence process; the terms and conditions of AkzoNobel's existing merger agreement with Axalta, including any matching rights, termination fees or other provisions that may affect the feasibility, timing or terms of the Joint Proposal; AkzoNobel's evaluation of whether the Joint Proposal constitutes a superior proposal; the ability to obtain required regulatory approvals from governmental authorities in applicable jurisdictions, and the terms, conditions, timing or remedies associated with any such approvals; the ability of Nippon Paint Group and Sherwin-Williams to coordinate and execute such transactions; the possibility that competing offers or acquisition proposals may be made; general economic, market and industry conditions; and the other risks and uncertainties described in Sherwin-Williams's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the "SEC").
Nippon Paint Group and Sherwin-Williams have not made any decision to make or participate in any binding offer to acquire AkzoNobel. No assurance can be given that any transaction will be proposed, that the parties will enter into any definitive agreement, or as to the terms or timing of any transaction.
Nippon Paint Group and Sherwin-Williams caution you not to place undue reliance on any of these forward-looking statements, as they are not guarantees of future performance or outcomes. Except as required by applicable law, none of Sherwin-Williams, Nippon Paint Group or any of their respective affiliates assumes any obligation to update or revise any forward-looking statement contained herein, whether as a result of new information, future events or otherwise.
Further, this communication does not constitute an offer to buy or a solicitation of an offer to sell securities. This communication is not a substitute for any proxy statement, offer to purchase, or other document that may be delivered to AkzoNobel securityholders in connection with a proposed transaction. Investors and securityholders of AkzoNobel are urged to read offer documents carefully in their entirety if and when they become available as they will contain important information about the proposed transaction.
On June 10, 2026, we delve into the DCF analysis for Sherwin-Williams Co SHW . The stock has experienced a price performance of +6.0% over the past week, but is down -1.7% over the past month and -3.7% year-to-date. Over the last year, the stock has declined by -12.4%.
DCF Earnings-based intrinsic value: $218.38 vs current price $310.55 (margin of safety: -42.2%) DCF FCF-based intrinsic value: $167.65 vs current price $310.55 (margin of safety: -85.2%) GF Score™ of 88/100 indicates a high reliability of the DCF inputs. What Is SHW Worth? DCF Earnings-Based Model The DCF earnings-based model utilizes a two-stage approach to determine the intrinsic value of Sherwin-Williams Co. In the first stage, we project earnings growth over the next 10 years, followed by a terminal growth phase. The assumptions for this model are as follows:
Parameter Value Current EPS (TTM, excl. non-recurring) $11.55 10-Year Growth Rate 12.5% 10-Year Treasury Rate 4.53% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In the Growth Phase (Years 1-10), the EPS is expected to grow at 12.5% per year, discounted at 11%. The calculated value for this stage is $124.44 per share. In the Terminal Phase (Years 11-20), we assume a 4% terminal growth rate, discounted at the same rate, yielding a value of $93.94 per share. The summary of these calculations is presented below:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 12.5%, discounted at 11% $124.44 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $93.94 Intrinsic Value Growth + Terminal $218.38 Comparing the current price of $310.55 with the intrinsic value of $218.38 indicates that the stock is modestly overvalued, with a margin of safety of -42.2%. It is important to note that GuruFocus uses EPS excluding non-recurring items because research shows stock prices correlate more closely with earnings than free cash flow. For further details, visit the SHW DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF) based DCF model provides an intrinsic value of $167.65 for Sherwin-Williams Co. When compared with the earnings-based intrinsic value of $218.38, the two models indicate a similar conclusion: the stock is modestly overvalued, with a significant margin of safety of -85.2% in the FCF model.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for Sherwin-Williams Co is calculated at $354.07, providing a third perspective on the stock's valuation. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. When comparing all three models, the DCF earnings-based and FCF-based models indicate overvaluation, while GF Value™ suggests the stock is undervalued. For more information, visit the GF Value™ page.
What Does SHW's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been found to generate higher long-term returns (backtested 2006-2021). The following table summarizes SHW's GF Score™ metrics:
Metric Rating GF Score™ 88/100 Financial Strength 5/10 Profitability 9/10 Growth 8/10 Valuation 10/10 Momentum 5/10 With a predictability rank of 2/5 stars, it suggests that the DCF model may be less reliable for this stock. For more details, visit the SHW stock page.
Key Assumptions and Limitations It is important to note that DCF models are highly sensitive to growth rate and discount rate assumptions. Stocks with low predictability ratings, such as Sherwin-Williams Co, tend to produce less reliable DCF estimates. The terminal growth rate of 4% is a simplifying assumption that may not reflect future economic conditions accurately.
What This Means for Investors In synthesizing the findings from the DCF earnings-based model, the DCF FCF model, and the GF Value™, it is clear that Sherwin-Williams Co is currently overvalued based on the DCF analyses, while the GF Value™ suggests a different perspective of undervaluation. Overall, the consensus indicates that investors should approach this stock with caution. For the full DCF analysis, visit the SHW DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is SHW's intrinsic value based on DCF?
earnings-based $218.38, FCF-based $167.65
Is SHW overvalued or undervalued?
Based on the DCF models, SHW is overvalued, while the GF Value™ suggests it is undervalued.
How reliable is the DCF model for SHW?
The predictability rank of 2/5 indicates that the DCF model may be less reliable for this stock.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Aston Martin Lagonda Global Holdings PLC (LSE:AML) shares rose almost 5% to 42p after the supercar maker reported higher revenue and profit margins in the first quarter, and said it had agreed a new £50 million funding injection.
Revenue rose 16% to £270.4 million in the quarter, while gross margin widened to 34.7% from 27.9% a year earlier, driven by higher average selling prices, deliveries of its Valhalla model and benefits from the ongoing transformation plan.
Adjusted EBIT loss narrowed to £56.9 million from £64.5 million, while operating loss reduced sharply to £8.9 million.
Wholesale volumes were broadly flat at 939 vehicles, though retail demand outpaced supply as the company maintained a disciplined production approach.
Average selling prices rose 17% to £252,000, reflecting increased deliveries of higher-value Specials, including 102 Valhalla units.
Net debt increased to £1.46 billion by the end of March. Liquidity has been boosted by a new £50 million facility from the Yew Tree Consortium, which is the investment vehicle linked to executive chairman Lawrence Stroll, and proceeds from the sale of Formula One naming rights.
Chief executive Adrian Hallmark said the group is “on track to deliver material financial improvement this year”.
This should be driven by an "enhanced product mix and benefits from the ongoing transformation programme and disciplined approach to operations".
Margins and performance are both expected to improve as deliveries ramp up through the year, including around 500 Valhalla deliveries, and a "more balanced production cadence" on models from the secoind quarter onwards.
BEIJING, China, May 12, 2026 (GLOBE NEWSWIRE) -- Li Auto Inc. (“Li Auto” or the “Company”) (Nasdaq: LI; HKEX: 2015), a leader in China’s new energy vehicle market, today announced that it will report its unaudited financial results for the first quarter of 2026 before the U.S. market opens on Thursday, May 28, 2026.
The Company’s management will hold an earnings conference call on Thursday, May 28, 2026, at 8:00 A.M. U.S. Eastern Time or 8:00 P.M. Beijing/Hong Kong Time on the same day.
For participants who wish to join the call, please complete online registration using the link provided below prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, passcode, and a unique access PIN. To join the conference, please dial the number provided, enter the passcode followed by your PIN, and you will join the conference instantly.
A replay of the conference call will be accessible through June 4, 2026, by dialing the following numbers:
United States:+1-855-883-1031Chinese Mainland:+86-400-1209-216Hong Kong, China:+852-800-930-639International:+61-7-3107-6325Replay PIN:10054648 A live and archived webcast of the conference call will also be available at the Company’s investor relations website at https://ir.lixiang.com.
About Li Auto Inc.
Li Auto Inc. is a leader in China’s new energy vehicle market. The Company designs, develops, manufactures, and sells premium smart electric vehicles. Its mission is: Be Proactive, Change the World. Through innovations in product, technology, and business model, the Company provides families with safe, convenient, and comfortable products and services. Li Auto is a pioneer in successfully commercializing extended-range electric vehicles in China. While firmly advancing along this technological route, it builds platforms for battery electric vehicles in parallel. The Company leverages technology to create value for users. It concentrates its in-house development efforts on proprietary range extension systems, innovative electric vehicle technologies, and smart vehicle solutions. The Company started volume production in November 2019. Its current model lineup includes a high-tech flagship family MPV, four Li L series extended-range electric SUVs, and two Li i series battery electric SUVs. The Company will continue to expand its product lineup to target a broader user base.
For more information, please visit: https://ir.lixiang.com.
Li Auto Inc. Sponsored ADR (LI - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Over the past month, shares of this company have returned 0%, compared to the Zacks S&P 500 composite's +8.8% change. During this period, the Zacks Automotive - Foreign industry, which Li Auto falls in, has lost 10.8%. The key question now is: What could be the stock's future direction?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Revisions to Earnings EstimatesRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Li Auto is expected to post break-even earnings per share for the current quarter, representing a year-over-year change of -100%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
For the current fiscal year, the consensus earnings estimate of $0.12 points to a change of -20% from the prior year. Over the last 30 days, this estimate has changed -11%.
For the next fiscal year, the consensus earnings estimate of $0.89 indicates a change of +641.9% from what Li Auto is expected to report a year ago. Over the past month, the estimate has remained unchanged.
With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #4 (Sell) for Li Auto.
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth ForecastEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
For Li Auto, the consensus sales estimate for the current quarter of $3.14 billion indicates a year-over-year change of -12%. For the current and next fiscal years, $18.35 billion and $22.2 billion estimates indicate +16.5% and +21% changes, respectively.
Last Reported Results and Surprise HistoryLi Auto reported revenues of $4.11 billion in the last reported quarter, representing a year-over-year change of -32.2%. EPS of $0 for the same period compares with $0.52 a year ago.
Compared to the Zacks Consensus Estimate of $4.28 billion, the reported revenues represent a surprise of -3.78%. The EPS surprise was -100%.
Over the last four quarters, Li Auto surpassed consensus EPS estimates times. The company topped consensus revenue estimates just once over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Li Auto is graded B on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Li Auto. However, its Zacks Rank #4 does suggest that it may underperform the broader market in the near term.
In the latest close session, Li Auto Inc. Sponsored ADR (LI - Free Report) was down 3.75% at $19.27. The stock's performance was behind the S&P 500's daily gain of 0.77%. Elsewhere, the Dow gained 0.75%, while the tech-heavy Nasdaq added 0.88%.
Coming into today, shares of the company had gained 10.24% in the past month. In that same time, the Auto-Tires-Trucks sector gained 14.25%, while the S&P 500 gained 8.15%.
The upcoming earnings release of Li Auto Inc. Sponsored ADR will be of great interest to investors. The company's earnings report is expected on May 28, 2026. The company's upcoming EPS is projected at $0, signifying a 100.00% drop compared to the same quarter of the previous year. Our most recent consensus estimate is calling for quarterly revenue of $3.14 billion, down 12.02% from the year-ago period.
For the full year, the Zacks Consensus Estimates project earnings of $0.12 per share and a revenue of $18.42 billion, demonstrating changes of -20% and +16.9%, respectively, from the preceding year.
Investors might also notice recent changes to analyst estimates for Li Auto Inc Sponsored ADR. Such recent modifications usually signify the changing landscape of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 10.98% lower. Li Auto Inc. Sponsored ADR is holding a Zacks Rank of #4 (Sell) right now.
From a valuation perspective, Li Auto Inc. Sponsored ADR is currently exchanging hands at a Forward P/E ratio of 164.55. This represents a premium compared to its industry average Forward P/E of 10.07.
The Automotive - Foreign industry is part of the Auto-Tires-Trucks sector. Currently, this industry holds a Zacks Industry Rank of 173, positioning it in the bottom 30% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
BEIJING, China, May 15, 2026 (GLOBE NEWSWIRE) -- Li Auto Inc. (“Li Auto” or the “Company”) (Nasdaq: LI; HKEX: 2015), a leader in China’s new energy vehicle market, today officially launched the all-new Li L9 with deliveries to commence on May 17, 2026. The vehicle is available in Ultra and Livis trims, priced at RMB459,800 and RMB509,800, respectively. For more details on the all-new Li L9, please visit Li Auto’s official website.
About Li Auto Inc.
Li Auto Inc. is a leader in China’s new energy vehicle market. The Company designs, develops, manufactures, and sells premium smart electric vehicles. Its mission is: Be Proactive, Change the World. Through innovations in product, technology, and business model, the Company provides families with safe, convenient, and comfortable products and services. Li Auto is a pioneer in successfully commercializing extended-range electric vehicles in China. While firmly advancing along this technological route, it builds platforms for battery electric vehicles in parallel. The Company leverages technology to create value for users. It concentrates its in-house development efforts on proprietary range extension systems, innovative electric vehicle technologies, and smart vehicle solutions. The Company started volume production in November 2019. Its current model lineup includes a high-tech flagship family MPV, four Li L series extended-range electric SUVs, and two Li i series battery electric SUVs. The Company will continue to expand its product lineup to target a broader user base.
For more information, please visit: https://ir.lixiang.com.
Safe Harbor Statement
This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “targets,” “likely to,” “challenges,” and similar statements. Li Auto may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) and The Stock Exchange of Hong Kong Limited (the “HKEX”), in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about Li Auto’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Li Auto’s strategies, future business development, and financial condition and results of operations; Li Auto’s limited operating history; risks associated with extended-range electric vehicles and high-power charging battery electric vehicles; Li Auto’s ability to develop, manufacture, and deliver vehicles of high quality and appeal to customers; Li Auto’s ability to generate positive cash flow and profits; product defects or any other failure of vehicles to perform as expected; Li Auto’s ability to compete successfully; Li Auto’s ability to build its brand and withstand negative publicity; cancellation of orders for Li Auto’s vehicles; Li Auto’s ability to develop new vehicles; and changes in consumer demand and government incentives, subsidies, or other favorable government policies. Further information regarding these and other risks is included in Li Auto’s filings with the SEC and the HKEX. All information provided in this press release is as of the date of this press release, and Li Auto does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
On May 18, 2026, Li Auto Inc LI shares fell 9.8%, bringing the current price to $16.66. The stock has experienced significant volatility over the past year, with a 52-week range of $15.71 to $32.03.
GF Value™ verdict: The current price is $16.66, compared to a GF Value™ of $23.07, indicating a 27.8% undervaluation.GF Score™ of 81/100 suggests a strong overall rating based on key financial metrics.Most notable signal: No insider transactions have been reported in the last 3 months. Is LI Overvalued or Undervalued? Li Auto Inc's current share price of $16.66 is significantly below the GF Value™ of $23.07, indicating that the stock is undervalued by approximately 27.8%. This discrepancy presents an opportunity for potential investors, as the margin of safety is considerable. However, it is important to note that the GF Valuation label indicates that the stock is classified as "Modestly Undervalued." This suggests that while there is potential upside, the valuation is not without risk, particularly in light of the company's recent price performance.
GF Value™ is GuruFocus' proprietary measure of intrinsic value, calculated from historical trading multiples, past business growth, and future performance estimates. As such, the current undervaluation could present an attractive entry point, but investors should remain cautious due to the company's recent volatility and performance trends.
How Does LI's Valuation Compare to Its History? Metric Current Historical P/E (TTM) 118.4x 26.5x Forward P/E 98.2x N/A Li Auto Inc's current P/E (TTM) of 118.4x is significantly higher than its 5-year median P/E of 26.5x, indicating that the stock is trading at a much higher valuation than historical levels. The forward P/E of 98.2x also suggests that expectations for future earnings remain elevated. This P/E analysis supports the GF Value™ verdict that the stock is undervalued, given that the current P/E is 346% above its 5-year median valuation, which could signify over-optimism regarding future growth.
What Does LI's GF Score™ Tell Us? Metric Rating GF Score™ 81 Financial Strength 6/10 Profitability 4/10 Growth 10/10 Valuation 8/10 Momentum 4/10 The GF Score™ of 81/100 indicates a strong overall rating for Li Auto Inc, with the highest score in the Growth category at 10/10, reflecting robust growth potential. However, the weakest area is Profitability, scoring only 4/10, suggesting that while the company may have promising growth prospects, it is currently facing challenges in translating that growth into profits. Financial Strength is also moderate at 6/10, indicating a stable but not exceptional financial position. Overall, the GF Score™ suggests that while there are strengths in growth potential, caution is warranted due to profitability concerns.
What Are Insiders Doing with LI Stock? There have been no insider transactions reported for Li Auto Inc in the last three months. This lack of activity could suggest that insiders may not see immediate opportunities or risks within the stock at its current price. While insider buying can often indicate confidence in a company's future prospects, the absence of activity may not necessarily reflect negative sentiment, as it could also indicate a wait-and-see approach among executives.
What This Means for Investors Based on the analysis of GF Value™, Li Auto Inc is currently undervalued. The significant margin of safety, coupled with a strong GF Score™, indicates potential for upside. However, investors should remain aware of the risks associated with the company's valuation metrics and recent performance trends.
For the complete analysis, visit the Li Auto Inc LI stock page. You can also explore the GF Value™ page for detailed valuation methodology, or use the GuruFocus Stock Screener to find similar opportunities.
Frequently Asked Questions What is LI's GF Score™?
Li Auto Inc has a GF Score™ of 81/100, indicating a strong overall rating based on key financial metrics that have historically correlated with higher long-term returns.
Is LI overvalued or undervalued?
Li Auto Inc is currently undervalued, with a GF Value™ of $23.07 compared to its current price of $16.66, suggesting a potential upside of 27.8%.
What is LI's P/E ratio?
The current P/E (TTM) for Li Auto Inc is 118.4x, which is significantly above its 5-year median P/E of 26.5x, indicating that the stock is trading at a considerably higher valuation than its historical levels.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Deep Fundamental Value Amid Market SelloffWhile short, medium, and long-term price trends remain heavily pressured, value score expansion comes after a punishing year for the EV manufacturer, with shares tumbling 42.73% over the past 12 months.
Benzinga Edge Stock Rankings' composite value metric—which evaluates a stock’s relative worth by comparing market price to underlying assets, earnings, and operating performance—indicates that the stock has become severely underpriced.
Wall Street powerhouse Morgan Stanley is maintaining an Overweight rating and a $26.00 price target—representing a staggering 60.69% upside from its recent closing price of $16.18.
Product Catalysts And $1 Billion Safety NetFurthermore, downside risks are also insulated by Li Auto’s balance sheet, which boasts over RMB100 billion in cash reserves and a newly authorized $1 billion share buyback program funded entirely via cash flow.
High-Stakes Earnings AheadAll eyes now turn to May 28, when Li Auto is scheduled to report its next financial update. As analysts have tempered expectations to an estimated $3.14 billion in revenue, the discounted valuation provides a risk-reward setup for long-term investors tracking the Chinese EV player.
LI Stock Tumbles In 2026LI shares have fallen by 6.31% on a year-to-date basis, and it is down by 8.33% year-to-date. Meanwhile, the Nasdaq Composite index was up 13.06% YTD.
Over the last month and the year, LI has declined by 13.52% and 42.73%, respectively. It has traded in a 52-week range of $15.64 to $32.03, and it was lower by 1.24% in premarket on Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Chinese electric vehicle (EV) manufacturer Nio (NIO 0.38%) closed Thursday at $5.60, up 0.18%. The stock swung as traders reacted to Q1 2026 results showing surging revenue, improved margins, and a return to adjusted profitability. Ongoing net losses and updated delivery guidance have investors split on whether the company is at an inflection point.
Trading volume reached 96.1 million shares, coming in about 139% above its three-month average of 40.2 million shares. Nio IPO'd in 2018 and has fallen 16% since going public.
How the markets moved todayS&P 500 (^GSPC +0.50%) inched up 0.18% to 7,446, while the Nasdaq Composite (^IXIC +0.31%) added 0.09% to finish at 26,293. Within auto manufacturers, industry peers Tesla (TSLA +1.65%) closed at $417.85 (up 0.14%) and Li Auto (LI +3.88%) finished at $16.20 (up 0.12%) as investors assessed EV demand and new models.
What this means for investorsNio shares initially spiked after its Q1 report showed revenue more than doubled year over year, gross margin continued to rise, and management guided for much higher second-quarter EV deliveries.
Nio delivered about 83,500 vehicles in the first quarter, but expects between 110,000 and 115,000 for Q2. That gave the stock early momentum, but gains were pared as investors considered its $45 million loss from operations. That was a decline from the approximately $100 million profit the company reported in the fourth quarter of 2025. Adjusted profit, excluding stock-based compensation, remained positive, however.
Investor focus will remain on that and the companies rising gross margin to see if it can achieve consistent profitability. Nio stock won’t likely break out unless that occurs.
Howard Smith has positions in Nio and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
Li Auto Inc. Sponsored ADR (LI - Free Report) ended the recent trading session at $15.89, demonstrating a -1.91% change from the preceding day's closing price. This change lagged the S&P 500's daily gain of 0.37%. Meanwhile, the Dow gained 0.59%, and the Nasdaq, a tech-heavy index, added 0.19%.
The company's shares have seen a decrease of 13.14% over the last month, not keeping up with the Auto-Tires-Trucks sector's gain of 4.11% and the S&P 500's gain of 5.51%.
The investment community will be closely monitoring the performance of Li Auto Inc. Sponsored ADR in its forthcoming earnings report. The company is scheduled to release its earnings on May 28, 2026. The company is expected to report EPS of $0, down 100% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.14 billion, down 12.02% from the year-ago period.
For the full year, the Zacks Consensus Estimates project earnings of $0.12 per share and a revenue of $18.42 billion, demonstrating changes of -20% and +16.91%, respectively, from the preceding year.
Investors should also pay attention to any latest changes in analyst estimates for Li Auto Inc Sponsored ADR. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 10.98% lower. Li Auto Inc. Sponsored ADR is currently sporting a Zacks Rank of #4 (Sell).
Looking at valuation, Li Auto Inc. Sponsored ADR is presently trading at a Forward P/E ratio of 133.15. For comparison, its industry has an average Forward P/E of 10.59, which means Li Auto Inc. Sponsored ADR is trading at a premium to the group.
The Automotive - Foreign industry is part of the Auto-Tires-Trucks sector. At present, this industry carries a Zacks Industry Rank of 204, placing it within the bottom 17% of over 250 industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.
Chinese smart electric vehicle (EV) maker Nio (NIO 0.38%) closed at $5.75, up 9.32% Wednesday. The stock moved higher after the company’s flagship ES9 SUV launched at a lower-than-expected starting price. Investors are watching upcoming ES9-driven delivery momentum as the price point signals potential worries about competition.
Trading volume reached 88.6 million shares, coming in about 110% above its three-month average of 42.2 million shares. Nio IPO'd in 2018 and has fallen 13% since going public after losing much of its 2020 momentum-driven gains.
How the markets moved todayThe S&P 500 (^GSPC +0.50%) inched up 0.03% to 7,521 on Wednesday, while the Nasdaq Composite (^IXIC +0.31%) added 0.07% to finish at 26,675. Within auto manufacturers, industry peers Tesla (TSLA +1.65%) closed at $440.36 (1.56%), and Li Auto (LI +3.88%) ended at $15.78 (-0.63%) as investors assessed competitive EV pricing and demand.
What this means for investorsNio surprised industry watchers by pricing its new flagship SUV below pre-sale quotes announced in April. Every model trim will be the equivalent of about $4,000 cheaper than originally thought. The three-row SUV is the largest battery-electric SUV ever produced in China.
The company is partnering with global professional basketball legend Yao Ming to promote the new offering. Rising competition could be driving the company’s aggressive pricing and advertising approach, giving investors something to monitor.
Nio announced strong delivery numbers in Q1, nearly doubling year over year. Management also predicted strong growth in Q2, giving some investors confidence to add Nio shares now.
Howard Smith has positions in Nio and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
Quarterly total revenues reached RMB23.0 billion (US$3.3 billion)1
Quarterly deliveries were 95,142 vehicles
BEIJING, China, May 28, 2026 (GLOBE NEWSWIRE) -- Li Auto Inc. (“Li Auto” or the “Company”) (Nasdaq: LI; HKEX: 2015), a leader in China’s new energy vehicle market, today announced its unaudited financial results for the quarter ended March 31, 2026.
Operating Highlights for the First Quarter of 2026
Total deliveries for the first quarter of 2026 were 95,142 vehicles, representing a 2.5% year-over-year increase.
2026 Q12025 Q42025 Q32025 Q2Deliveries95,142109,19493,211111,074 2025 Q12024 Q42024 Q32024 Q2Deliveries92,864158,696152,831108,581 As of March 31, 2026, in China, the Company had 517 retail stores in 160 cities, 552 servicing centers and Li Auto-authorized servicing shops operating in 223 cities, and 4,057 super charging stations in operation equipped with 22,439 charging stalls.
Financial Highlights for the First Quarter of 2026
Vehicle sales were RMB21.5 billion (US$3.1 billion) in the first quarter of 2026, representing a decrease of 12.7% from RMB24.7 billion in the first quarter of 2025 and a decrease of 21.0% from RMB27.3 billion in the fourth quarter of 2025.Vehicle margin2 was 6.1% in the first quarter of 2026, compared with 19.8% in the first quarter of 2025 and 16.8% in the fourth quarter of 2025.Total revenues were RMB23.0 billion (US$3.3 billion) in the first quarter of 2026, representing a decrease of 11.4% from RMB25.9 billion in the first quarter of 2025 and a decrease of 20.1% from RMB28.8 billion in the fourth quarter of 2025.Gross profit was RMB1.8 billion (US$262.1 million) in the first quarter of 2026, representing a decrease of 66.0% from RMB5.3 billion in the first quarter of 2025 and a decrease of 64.8% from RMB5.1 billion in the fourth quarter of 2025.Gross margin was 7.9% in the first quarter of 2026, compared with 20.5% in the first quarter of 2025 and 17.8% in the fourth quarter of 2025.Operating expenses were RMB4.8 billion (US$696.8 million) in the first quarter of 2026, representing a decrease of 4.8% from RMB5.0 billion in the first quarter of 2025 and a decrease of 13.8% from RMB5.6 billion in the fourth quarter of 2025. Loss from operations was RMB3.0 billion (US$434.7 million) in the first quarter of 2026, compared with RMB271.7 million income from operations in the first quarter of 2025 and RMB442.6 million loss from operations in the fourth quarter of 2025.Operating margin was negative 13.0% in the first quarter of 2026, compared with 1.0% in the first quarter of 2025 and negative 1.5% in the fourth quarter of 2025.Net loss was RMB2.3 billion (US$330.0 million) in the first quarter of 2026, compared with net income of RMB646.6 million in the first quarter of 2025 and RMB20.2 million in the fourth quarter of 2025. Non-GAAP net loss3 was RMB2.1 billion (US$305.6 million) in the first quarter of 2026, compared with non-GAAP net income of RMB1.0 billion in the first quarter of 2025 and RMB274.4 million in the fourth quarter of 2025.Diluted net loss per ADS4 attributable to ordinary shareholders was RMB2.26 (US$0.33) in the first quarter of 2026, compared with diluted net earnings per ADS attributable to ordinary shareholders of RMB0.62 in the first quarter of 2025 and RMB0.01 in the fourth quarter of 2025. Non-GAAP diluted net loss per ADS attributable to ordinary shareholders was RMB2.09 (US$0.30) in the first quarter of 2026, compared with non-GAAP diluted net earnings per ADS attributable to ordinary shareholders of RMB0.96 in the first quarter of 2025 and RMB0.25 in the fourth quarter of 2025.Net cash used in operating activities was RMB6.1 billion (US$883.0 million) in the first quarter of 2026, compared with RMB1.7 billion net cash used in operating activities in the first quarter of 2025 and RMB3.5 billion net cash provided by operating activities in the fourth quarter of 2025.Free cash flow5 was negative RMB7.4 billion (US$1.1 billion) in the first quarter of 2026, compared with negative RMB2.5 billion in the first quarter of 2025 and RMB2.5 billion in the fourth quarter of 2025.
Key Financial Results(in millions, except for percentages and per ADS data)
For the Three Months Ended % Change6
March 31,
2025 December 31,
2025 March 31,
2026 YoY QoQ RMB RMB RMB Vehicle sales24,678.6 27,252.3 21,533.2 (12.7)% (21.0)%Vehicle margin19.8% 16.8% 6.1% (13.7)pts (10.7)pts Total revenues25,926.8 28,775.4 22,982.9 (11.4)% (20.1)%Gross profit5,318.5 5,130.6 1,808.0 (66.0)% (64.8)%Gross margin20.5% 17.8% 7.9% (12.6)pts (9.9)pts Operating expenses(5,046.8) (5,573.2) (4,806.8) (4.8)% (13.8)%Income/(Loss) from operations271.7 (442.6) (2,998.8) N/A 577.6%Operating margin1.0% (1.5)% (13.0)% (14.0)pts (11.5)pts Net income/(loss)646.6 20.2 (2,276.0) N/A N/ANon-GAAP net income/(loss)1,014.3 274.4 (2,108.0) N/A N/A Diluted net earnings/(loss) per ADS attributable to ordinary shareholders0.62 0.01 (2.26)
N/A N/ANon-GAAP diluted net earnings/(loss) per ADS attributable to ordinary shareholders0.96 0.25 (2.09) N/A
N/A
Net cash (used in)/provided by operating activities(1,701.0) 3,521.4 (6,091.0) 258.1% N/AFree cash flow (non-GAAP)(2,530.6) 2,467.6 (7,388.3) 192.0% N/A Recent Developments
Delivery Update
In April 2026, the Company delivered 34,085 vehicles. As of April 30, 2026, in China, the Company had 511 retail stores in 160 cities, 550 servicing centers and Li Auto-authorized servicing shops operating in 223 cities, and 4,077 super charging stations in operation equipped with 22,509 charging stalls.
All-New Li L9
In May 2026, the Company launched and commenced deliveries of its all-new Li L9. This model is available in two trims: Ultra and Livis. The Li L9 Ultra comes standard with steer‑by‑wire, rear‑wheel steering, and Li Auto’s third‑generation dual‑chamber, dual‑valve Magic Carpet Air Suspension. Its autonomous driving system is powered by a proprietary MAHE M100 chip, and the smart cockpit is powered by a Qualcomm Snapdragon 8797 Max chip. The Li L9 Livis features a proprietary 800V active suspension system and a fully drive‑by‑wire chassis. Its autonomous driving system is equipped with dual proprietary MAHE M100 chips and four LiDAR sensors, and the smart cockpit is powered by a Qualcomm Snapdragon 8797 Elite chip. Both trims come standard with a 72.7 kWh 5C battery and feature Li Auto’s third-generation range extender, as well as the MindVLA large model and 3D ViT Encoder. The Li L9 Ultra and Li L9 Livis are priced at RMB459,800 and RMB509,800, respectively.
US$1.0 Billion Share Repurchase Program
Pursuant to its US$1.0 billion share repurchase program announced on March 24, 2026, the Company has repurchased a total of approximately 16.4 million Class A ordinary shares (including approximately 6.7 million ADSs) for an aggregate consideration of approximately US$139.7 million as of May 26, 2026. Put Right Offer for Convertible Senior Notes due 2028
On April 30, 2026, the Company announced completion of the put right offer relating to its 0.25% Convertible Senior Notes due 2028 (CUSIP No. 50202M AB8) (the “Notes”). US$716,800,000 aggregate principal amount of the Notes (the “Repurchase Price”) was validly surrendered and not withdrawn prior to the expiration of the put right offer. The Company has forwarded cash in payment of the Repurchase Price to the paying agent for distribution to the holders who had validly exercised their put right. Following settlement of the repurchase, US$145,700,000 aggregate principal amount of the Notes remains outstanding and continues to be subject to the existing terms of the indenture and the Notes.
ESG
On April 10, 2026, the Company published its 2025 Environmental, Social and Governance (ESG) Report and its first Climate-Related Disclosures Report (https://ir.lixiang.com/esg), showcasing its strategic initiatives, measurable achievements, and ongoing dedication to sustainable development.
CEO and CFO Comments
Mr. Xiang Li, chairman and chief executive officer of Li Auto, commented, “Our organizational and supply chain optimizations delivered concrete results in the first quarter, enabling us to reclaim the top spot among domestic automotive brands in China’s RMB200,000 and above NEV market. Meanwhile, the all-new Li L9, launched in mid-May, demonstrates the strength of our flagship products with its all-around technological leadership and product excellence, reinforcing our confidence in establishing a benchmark position in the flagship SUV market. The successful integrated deployment of our in-house MAHE M100 chip and MindVLA large model into the vehicle represents an industry-leading technological breakthrough, laying the foundation for efficient technology iterations in the future. We look forward to launching the all-new Li L8 at the end of June to meet broader market demand. As we advance our AI initiatives and strengthen our core competencies, we remain committed to transforming everyday life for more users through cutting-edge products and premium services.”
Mr. Tie Li, chief financial officer of Li Auto, added, “Our first-quarter gross margin reflected our user-centric measures related to Li i6 deliveries, as well as raw material price fluctuations and our model refresh cycle. As delivery rebounds drive economies of scale and our updated product portfolio gains traction, we expect a gradual improvement in profitability. While executing the US$1 billion share repurchase program with confidence in our long-term growth prospects, we continue to benefit from a solid cash position that provides ongoing flexibility for strategic investments. With substantial runway ahead, we remain confident in our ability to create lasting value for all stakeholders.”
Financial Results for the First Quarter of 2026
Revenues
Total revenues were RMB23.0 billion (US$3.3 billion) in the first quarter of 2026, representing a decrease of 11.4% from RMB25.9 billion in the first quarter of 2025 and a decrease of 20.1% from RMB28.8 billion in the fourth quarter of 2025.Vehicle sales were RMB21.5 billion (US$3.1 billion) in the first quarter of 2026, representing a decrease of 12.7% from RMB24.7 billion in the first quarter of 2025 and a decrease of 21.0% from RMB27.3 billion in the fourth quarter of 2025. The decrease in revenue from vehicle sales over the first quarter of 2025 was primarily attributable to the lower average selling price due to different product mix. The decrease in revenue from vehicle sales over the fourth quarter of 2025 was primarily attributable to the decrease in vehicle deliveries due to seasonal factors related to the Chinese New Year holiday and a lower average selling price due to different product mix.Other sales and services were RMB1.4 billion (US$210.2 million) in the first quarter of 2026, representing an increase of 16.1% from RMB1.2 billion in the first quarter of 2025 and a decrease of 4.8% from RMB1.5 billion in the fourth quarter of 2025. The increase in revenue from other sales and services over the first quarter of 2025 was mainly due to increased provision of services and sales of accessories, which was in line with higher accumulated vehicle sales. The revenue from other sales and services remained relatively stable over the fourth quarter of 2025.
Cost of Sales and Gross Margin
Cost of sales was RMB21.2 billion (US$3.1 billion) in the first quarter of 2026, representing an increase of 2.7% from RMB20.6 billion in the first quarter of 2025 and a decrease of 10.4% from RMB23.6 billion in the fourth quarter of 2025. The cost of sales remained relatively stable over the first quarter of 2025. The decrease in cost of sales over the fourth quarter of 2025 was primarily attributable to the decrease in vehicle deliveries.Gross profit was RMB1.8 billion (US$262.1 million) in the first quarter of 2026, representing a decrease of 66.0% from RMB5.3 billion in the first quarter of 2025 and a decrease of 64.8% from RMB5.1 billion in the fourth quarter of 2025.Vehicle margin was 6.1% in the first quarter of 2026, compared with 19.8% in the first quarter of 2025 and 16.8% in the fourth quarter of 2025. The decrease in vehicle margin over the first quarter of 2025 and the fourth quarter of 2025 was mainly attributable to different product mix.Gross margin was 7.9% in the first quarter of 2026, compared with 20.5% in the first quarter of 2025 and 17.8% in the fourth quarter of 2025. The decrease in gross margin over the first quarter of 2025 and the fourth quarter of 2025 was mainly due to the decrease in vehicle margin.
Operating Expenses
Operating expenses were RMB4.8 billion (US$696.8 million) in the first quarter of 2026, representing a decrease of 4.8% from RMB5.0 billion in the first quarter of 2025 and a decrease of 13.8% from RMB5.6 billion in the fourth quarter of 2025.Research and development expenses were RMB2.7 billion (US$394.6 million) in the first quarter of 2026, representing an increase of 8.3% from RMB2.5 billion in the first quarter of 2025 and a decrease of 9.8% from RMB3.0 billion in the fourth quarter of 2025. Research and development expenses remained relatively stable over the first quarter of 2025 and the fourth quarter of 2025.Selling, general and administrative expenses were RMB2.0 billion (US$297.1 million) in the first quarter of 2026, representing a decrease of 19.0% from RMB2.5 billion in the first quarter of 2025 and a decrease of 22.6% from RMB2.6 billion in the fourth quarter of 2025. The decrease in selling, general and administrative expenses over the first quarter of 2025 and the fourth quarter of 2025 was primarily due to decreased employee compensation and reduced expenses related to marketing and promotional activities.
Income/(Loss) from Operations
Loss from operations was RMB3.0 billion (US$434.7 million) in the first quarter of 2026, compared with RMB271.7 million income from operations in the first quarter of 2025 and RMB442.6 million loss from operations in the fourth quarter of 2025. Operating margin was negative 13.0% in the first quarter of 2026, compared with 1.0% in the first quarter of 2025 and negative 1.5% in the fourth quarter of 2025. Non-GAAP loss from operations was RMB2.8 billion (US$410.4 million) in the first quarter of 2026, compared with RMB639.3 million non-GAAP income from operations in the first quarter of 2025 and RMB188.4 million non-GAAP loss from operations in the fourth quarter of 2025.
Net Income/(Loss) and Net Earnings/(Loss) Per Share
Net loss was RMB2.3 billion (US$330.0 million) in the first quarter of 2026, compared with net income of RMB646.6 million in the first quarter of 2025 and RMB20.2 million in the fourth quarter of 2025. Non-GAAP net loss was RMB2.1 billion (US$305.6 million) in the first quarter of 2026, compared with non-GAAP net income of RMB1.0 billion in the first quarter of 2025 and RMB274.4 million in the fourth quarter of 2025.Basic and diluted net loss per ADS attributable to ordinary shareholders were both RMB2.26 (US$0.33) in the first quarter of 2026, compared with RMB0.65 and RMB0.62 basic and diluted net earnings per ADS attributable to ordinary shareholders in the first quarter of 2025, respectively, and RMB0.01 and RMB0.01 basic and diluted net earnings per ADS attributable to ordinary shareholders in the fourth quarter of 2025, respectively. Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders were both RMB2.09 (US$0.30) in the first quarter of 2026, compared with RMB1.01 and RMB0.96 non-GAAP basic and diluted net earnings per ADS attributable to ordinary shareholders in the first quarter of 2025, respectively, and RMB0.26 and RMB0.25 non-GAAP basic and diluted net earnings per ADS attributable to ordinary shareholders in the fourth quarter of 2025, respectively. Cash Position, Operating Cash Flow and Free Cash Flow
Cash position7 was RMB94.3 billion (US$13.7 billion) as of March 31, 2026.Net cash used in operating activities was RMB6.1 billion (US$883.0 million) in the first quarter of 2026, compared with RMB1.7 billion net cash used in operating activities in the first quarter of 2025 and RMB3.5 billion net cash provided by operating activities in the fourth quarter of 2025. The change in net cash used in operating activities over the first quarter of 2025 was mainly due to the decrease in cash received from customers resulting from the lower average selling price. The change in net cash used in operating activities over the fourth quarter of 2025 was mainly due to the decrease in cash received from customers caused by a seasonal sequential decline in vehicle deliveries.Free cash flow was negative RMB7.4 billion (US$1.1 billion) in the first quarter of 2026, compared with negative RMB2.5 billion in the first quarter of 2025 and RMB2.5 billion in the fourth quarter of 2025.
Business Outlook
For the second quarter of 2026, the Company expects:
Deliveries of vehicles to be between 95,000 and 100,000 vehicles, representing a year-over-year decrease of 14.5% to 10.0%.Total revenues to be between RMB24.1 billion (US$3.5 billion) and RMB25.4 billion (US$3.7 billion), representing a year-over-year decrease of 20.2% to 16.0%.
This business outlook reflects the Company’s current and preliminary views on its business situation and market conditions, which are subject to change.
Conference Call
Management will hold a conference call at 8:00 a.m. U.S. Eastern Time on Thursday, May 28, 2026 (8:00 p.m. Beijing/Hong Kong Time on May 28, 2026) to discuss financial results and answer questions from investors and analysts.
For participants who wish to join the call, please complete online registration using the link provided below prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, passcode, and a unique access PIN. To join the conference, please dial the number provided, enter the passcode followed by your PIN, and you will join the conference instantly.
A replay of the conference call will be accessible through June 4, 2026, by dialing the following numbers:
United States:+1-855-883-1031Chinese Mainland:+86-400-1209-216Hong Kong, China:+852-800-930-639International:+61-7-3107-6325Replay PIN:10054648 Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at https://ir.lixiang.com.
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures, such as non-GAAP cost of sales, non-GAAP research and development expenses, non-GAAP selling, general and administrative expenses, non-GAAP income/(loss) from operations, non-GAAP net income/(loss), non-GAAP net income/(loss) attributable to ordinary shareholders, non-GAAP basic and diluted net earnings/(loss) per ADS attributable to ordinary shareholders, non-GAAP basic and diluted net earnings/(loss) per share attributable to ordinary shareholders and free cash flow, in evaluating its operating results and for financial and operational decision-making purposes. By excluding the impact of share-based compensation expenses and release of valuation allowance on deferred tax assets, the Company believes that the non-GAAP financial measures help identify underlying trends in its business and enhance the overall understanding of the Company’s past performance and future prospects. The Company also believes that the non-GAAP financial measures allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.
The non-GAAP financial measures are not presented in accordance with U.S. GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The non-GAAP financial measures have limitations as analytical tools and when assessing the Company’s operating performance, investors should not consider them in isolation, or as a substitute for financial information prepared in accordance with U.S. GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.
The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.
For more information on the non-GAAP financial measures, please see the table captioned “Unaudited Reconciliation of U.S. GAAP and Non-GAAP Results” set forth at the end of this press release.
Exchange Rate Information
This press release contains translations of certain Renminbi amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi are made at a rate of RMB6.8980 to US$1.00, the exchange rate on March 31, 2026, set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the Renminbi or U.S. dollars amounts referred could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.
About Li Auto Inc.
Li Auto Inc. is a leader in China’s new energy vehicle market. The Company designs, develops, manufactures, and sells premium smart electric vehicles. Its mission is: Be Proactive, Change the World. Through innovations in product, technology, and business model, the Company provides families with safe, convenient, and comfortable products and services. Li Auto is a pioneer in successfully commercializing extended-range electric vehicles in China. While firmly advancing along this technological route, it builds platforms for battery electric vehicles in parallel. The Company leverages technology to create value for users. It concentrates its in-house development efforts on proprietary range extension systems, innovative electric vehicle technologies, and smart vehicle solutions. The Company started volume production in November 2019. Its current model lineup includes a high-tech flagship family MPV, four Li L series extended-range electric SUVs, and two Li i series battery electric SUVs. The Company will continue to expand its product lineup to target a broader user base.
For more information, please visit: https://ir.lixiang.com.
Safe Harbor Statement
This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “targets,” “likely to,” “challenges,” and similar statements. Li Auto may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) and The Stock Exchange of Hong Kong Limited (the “HKEX”), in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about Li Auto’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Li Auto’s strategies, future business development, and financial condition and results of operations; Li Auto’s limited operating history; risks associated with extended-range electric vehicles and high-power charging battery electric vehicles; Li Auto’s ability to develop, manufacture, and deliver vehicles of high quality and appeal to customers; Li Auto’s ability to generate positive cash flow and profits; product defects or any other failure of vehicles to perform as expected; Li Auto’s ability to compete successfully; Li Auto’s ability to build its brand and withstand negative publicity; cancellation of orders for Li Auto’s vehicles; Li Auto’s ability to develop new vehicles; and changes in consumer demand and government incentives, subsidies, or other favorable government policies. Further information regarding these and other risks is included in Li Auto’s filings with the SEC and the HKEX. All information provided in this press release is as of the date of this press release, and Li Auto does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Christensen Advisory
Roger Hu
Tel: +86-10-5900-1548
Email: [email protected]
Li Auto Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)(All amounts in thousands, except for ADS/ordinary share and per ADS/ordinary share data)
For the Three Months Ended March 31,
2025 December 31,
2025 March 31,
2026 March 31,
2026 RMB RMB RMB US$Revenues: Vehicle sales24,678,585 27,252,291 21,533,182 3,121,656Other sales and services1,248,229 1,523,131 1,449,729 210,167Total revenues25,926,814 28,775,422 22,982,911 3,331,823Cost of sales: Vehicle sales(19,801,927) (22,669,292) (20,225,885) (2,932,138)Other sales and services(806,428) (975,501) (948,981) (137,573)Total cost of sales(20,608,355) (23,644,793) (21,174,866) (3,069,711)Gross profit5,318,459 5,130,629 1,808,045 262,112Operating expenses: Research and development(2,513,854) (3,016,587) (2,722,159) (394,630)Selling, general and administrative(2,531,009) (2,647,068) (2,049,203) (297,072)Other operating (expense)/income, net(1,942) 90,438 (35,473) (5,143)Total operating expenses(5,046,805) (5,573,217) (4,806,835) (696,845)Income/(Loss) from operations271,654 (442,588) (2,998,790) (434,733)Other (expense)/income: Interest expense(48,220) (37,419) (40,658) (5,894)Interest income and investment income, net516,261 430,733 394,020 57,121Others, net34,730 21,930 44,248 6,415Income/(Loss) before income tax774,425 (27,344) (2,601,180) (377,091)Income tax (expense)/benefit(127,780) 47,587 325,148 47,137Net income/(loss)646,645 20,243 (2,276,032) (329,954)Less: Net (loss)/income attributable to noncontrolling interests(3,679) 13,724 13,499 1,957Net income/(loss) attributable to ordinary shareholders of Li Auto Inc.650,324 6,519 (2,289,531) (331,911) Net income/(loss)646,645 20,243 (2,276,032) (329,954)Other comprehensive loss Foreign currency translation adjustment, net of nil tax(69,994) (337,950) (161,404) (23,399)Total other comprehensive loss(69,994) (337,950) (161,404) (23,399)Total comprehensive income/(loss)576,651 (317,707) (2,437,436) (353,353)Less: Net (loss)/income attributable to noncontrolling interests(3,679) 13,724 13,499 1,957Comprehensive income/(loss) attributable to ordinary shareholders of Li Auto Inc.580,330 (331,431) (2,450,935) (355,310)Weighted average number of ADSs Basic1,004,099,494 1,010,547,649 1,013,814,503 1,013,814,503Diluted1,069,104,610 1,041,928,950 1,013,814,503 1,013,814,503Net earnings/(loss) per ADS attributable to ordinary shareholders Basic0.65 0.01 (2.26) (0.33)Diluted0.62 0.01 (2.26) (0.33)Weighted average number of ordinary shares Basic2,008,198,987 2,021,095,298 2,027,629,006 2,027,629,006Diluted2,138,209,219 2,083,857,900 2,027,629,006 2,027,629,006Net earnings/(loss) per share attributable to ordinary shareholders Basic0.32 0.00 (1.13) (0.16)Diluted0.31 0.00 (1.13) (0.16) Li Auto Inc.
Unaudited Condensed Consolidated Balance Sheets(All amounts in thousands)
As of December 31,
2025 March 31,
2026 March 31,
2026 RMB RMB US$ASSETS Current assets: Cash and cash equivalents56,691,765 42,815,524 6,206,948Restricted cash216,314 55,043 7,980Time deposits and short-term investments44,331,407 50,289,636 7,290,466Trade receivable119,823 129,005 18,702Inventories8,752,439 7,034,287 1,019,757Prepayments and other current assets5,174,246 5,281,281 765,625Total current assets115,285,994 105,604,776 15,309,478Non-current assets: Long-term investments848,672 2,013,304 291,868Property, plant and equipment, net22,774,938 21,840,220 3,166,167Operating lease right-of-use assets, net9,099,313 8,556,156 1,240,382Intangible assets, net1,191,974 1,172,077 169,915Goodwill5,484 5,484 795Deferred tax assets3,334,206 3,589,633 520,388Other non-current assets1,755,237 1,783,871 258,607Total non-current assets39,009,824 38,960,745 5,648,122Total assets154,295,818 144,565,521 20,957,600LIABILITIES AND EQUITY Current liabilities: Short-term borrowings6,217,745 6,162,841 893,424Trade and notes payable40,579,219 35,975,795 5,215,395Amounts due to related parties26,644 14,312 2,075Deferred revenue, current1,621,429 1,395,838 202,354Operating lease liabilities, current1,690,356 1,546,085 224,135Accruals and other current liabilities13,412,260 11,094,658 1,608,390Total current liabilities63,547,653 56,189,529 8,145,773Non-current liabilities: Long-term borrowings3,299,203 3,787,859 549,124Deferred revenue, non-current624,734 654,058 94,818Operating lease liabilities, non-current6,258,957 5,892,209 854,191Finance lease liabilities, non-current348,506 348,912 50,582Deferred tax liabilities691,652 589,971 85,528Other non-current liabilities6,385,370 6,496,091 941,735Total non-current liabilities17,608,422 17,769,100 2,575,978Total liabilities81,156,075 73,958,629 10,721,751Total Li Auto Inc. shareholders’ equity72,619,255 70,072,905 10,158,437Noncontrolling interests520,488 533,987 77,412Total shareholders’ equity73,139,743 70,606,892 10,235,849Total liabilities and shareholders’ equity154,295,818 144,565,521 20,957,600 Li Auto Inc.
Unaudited Condensed Consolidated Statements of Cash Flows(All amounts in thousands)
For the Three Months Ended March 31,
2025 December 31,
2025 March 31,
2026 March 31,
2026 RMB RMB RMB US$ Net cash (used in)/provided by operating activities(1,700,968) 3,521,370 (6,090,994) (883,009) Net cash (used in)/provided by investing activities(10,959,789) 2,110,251 (8,181,439) (1,186,060) Net cash provided by financing activities61,406 178,563 337,303 48,899 Effect of exchange rate changes on cash, cash equivalents and restricted cash(70,282) (225,491) (102,382) (14,841) Net change in cash, cash equivalents and restricted cash(12,669,633) 5,584,693 (14,037,512) (2,035,011) Cash, cash equivalents and restricted cash at beginning of period65,907,972 51,323,386 56,908,079 8,249,939 Cash, cash equivalents and restricted cash at end of period53,238,339 56,908,079 42,870,567 6,214,928 Net cash (used in)/provided by operating activities(1,700,968) 3,521,370 (6,090,994) (883,009) Capital expenditures(829,597) (1,053,769) (1,297,326) (188,073) Free cash flow (non-GAAP)(2,530,565) 2,467,601 (7,388,320) (1,071,082) Li Auto Inc.
Unaudited Reconciliation of U.S. GAAP and Non-GAAP Results(All amounts in thousands, except for ADS/ordinary share and per ADS/ordinary share data)
For the Three Months Ended March 31,
2025 December 31,
2025 March 31,
2026 March 31,
2026 RMB RMB RMB US$Cost of sales(20,608,355) (23,644,793) (21,174,866) (3,069,711)Share-based compensation expenses7,196 10,405 8,730 1,266Non-GAAP cost of sales(20,601,159) (23,634,388) (21,166,136) (3,068,445) Research and development expenses(2,513,854) (3,016,587) (2,722,159) (394,630)Share-based compensation expenses238,932 143,303 128,160 18,579Non-GAAP research and development expenses(2,274,922) (2,873,284) (2,593,999) (376,051) Selling, general and administrative expenses(2,531,009) (2,647,068) (2,049,203) (297,072)Share-based compensation expenses121,511 100,492 31,156 4,517Non-GAAP selling, general and administrative expenses(2,409,498) (2,546,576) (2,018,047) (292,555) Income/(Loss) from operations271,654 (442,588) (2,998,790) (434,733)Share-based compensation expenses367,639 254,200 168,046 24,362Non-GAAP income/(loss) from operations639,293 (188,388) (2,830,744) (410,371) Net income/(loss)646,645 20,243 (2,276,032) (329,954)Share-based compensation expenses367,639 254,200 168,046 24,362Non-GAAP net income/(loss)81,014,284 274,443 (2,107,986) (305,592) Net income/(loss) attributable to ordinary shareholders of Li Auto Inc.650,324 6,519 (2,289,531) (331,911)Share-based compensation expenses367,639 254,200 168,046 24,362Non-GAAP net income/(loss) attributable to ordinary shareholders of Li Auto Inc.1,017,963 260,719 (2,121,485) (307,549) Weighted average number of ADSs Basic1,004,099,494 1,010,547,649 1,013,814,503 1,013,814,503Diluted1,069,104,610 1,041,928,950 1,013,814,503 1,013,814,503Non-GAAP net earnings/(loss) per ADS attributable to ordinary shareholders Basic1.01 0.26 (2.09) (0.30)Diluted0.96 0.25 (2.09) (0.30)Weighted average number of ordinary shares Basic2,008,198,987 2,021,095,298 2,027,629,006 2,027,629,006Diluted2,138,209,219 2,083,857,900 2,027,629,006 2,027,629,006Non-GAAP net earnings/(loss) per share attributable to ordinary shareholders Basic0.51 0.13 (1.05) (0.15)Diluted0.48 0.13 (1.05) (0.15) ______________________________
1 All translations from Renminbi (“RMB”) to U.S. dollars (“US$”) are made at a rate of RMB6.8980 to US$1.00, the exchange rate on March 31, 2026 as set forth in the H.10 statistical release of the Federal Reserve Board.
2 Vehicle margin is the margin of vehicle sales, which is calculated based on revenues and cost of sales derived from vehicle sales only.
3 The Company’s non-GAAP financial measures exclude share-based compensation expenses and release of valuation allowance on deferred tax assets. See “Unaudited Reconciliation of U.S. GAAP and Non-GAAP Results” set forth at the end of this press release.
4 Each ADS represents two Class A ordinary shares.
5 Free cash flow represents operating cash flow less capital expenditures, which is considered a non-GAAP financial measure.
6 Except for vehicle margin, gross margin, and operating margin, where absolute changes instead of percentage changes are presented.
7 Cash position includes cash and cash equivalents, restricted cash, time deposits and short-term investments, and long-term time deposits and financial instruments included in long-term investments.
8 Non-GAAP items have no tax impact for all the periods presented.
A Deep Dive Into NVIDIA’s Latest Portfolio MovesLi Auto NASDAQ: LI executives said the company returned to a sales growth trajectory in the first quarter of 2026, but the Chinese electric vehicle maker reported sharply lower margins and a net loss as product mix and its model refresh cycle weighed on profitability.
Chairman and CEO Xiang Li said Li Auto returned to the top position in sales among Chinese brands in China’s new energy vehicle market priced at RMB 200,000 and above during the January-to-April period. He said monthly sales of the company’s BEV model, the Li i6, have stabilized at 20,000 units per month, placing it among the top three BEV SUVs.
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Before the Moon Base Gets Built, These 4 Companies WinLi also highlighted the May 15 launch of the all-new Li L9, with deliveries beginning May 17. The model is offered in Livis and Ultra trims priced at RMB 509,800 and RMB 459,800, respectively. Li said the company’s goal is to position the new L9 as a flagship SUV and that the Livis trim secured more than 10,000 orders within two weeks, with transaction prices above RMB 500,000.
Revenue Falls as Margins Contract CFO Johnny Tie Li said total revenue in the first quarter was RMB 23 billion. Vehicle sales revenue was RMB 21.5 billion, down 12.7% year over year and 21% quarter over quarter. He attributed the year-over-year decline mainly to a lower average selling price from product mix, while the sequential decline reflected reduced deliveries tied to Chinese New Year seasonality and lower average selling price.
Lumentum's 1,500% Run and Nvidia's $2 Billion Deal: What Comes Next?Gross profit fell to RMB 1.8 billion, down 66% from a year earlier and 64.8% from the prior quarter. Vehicle margin declined to 6.1%, compared with 19.8% a year earlier and 16.8% in the fourth quarter. Gross margin was 7.9%, down from 20.5% a year earlier and 17.8% in the prior quarter.
Operating expenses were RMB 4.8 billion, down 4.8% year over year and 13.8% sequentially. Research and development expenses rose 8.3% year over year to RMB 2.7 billion, while selling, general and administrative expenses declined 19% year over year to RMB 2 billion.
Li Auto reported a loss from operations of RMB 3 billion, compared with operating income of RMB 271.7 million a year earlier. Net loss was RMB 2.3 billion, compared with net income of RMB 646.6 million in the year-ago period. Diluted net loss per ADS attributable to ordinary shareholders was RMB 2.26.
The company used RMB 6.1 billion in operating cash flow during the quarter, and free cash flow was negative RMB 7.4 billion. Li said the company ended the quarter with RMB 94.3 billion in cash. He also noted that Li Auto has repurchased 17.5 million Class A ordinary shares, including 7.3 million ADS, for $148.1 million under a $1 billion share repurchase program announced in March.
Second-Quarter Outlook and Margin Recovery For the second quarter, Li Auto expects deliveries of 95,000 to 100,000 vehicles and total revenue of RMB 24.1 billion to RMB 25.4 billion.
In response to an analyst question about profitability, Johnny Tie Li said the first-quarter gross margin was affected by the L-series refresh cycle, a higher mix of i6 deliveries and purchase tax subsidies for the i6. He said the company expects gross margin to recover to about 10% in the second quarter.
“Looking at the full year, as we complete our model refresh cycle and optimize our production layout, we expect a continued improvement in our gross margin,” Li said.
L9 Ramp-Up and L8 Launch Plans During the Q&A session, management said the Livis version accounts for more than 90% of all L9 orders, while the Ultra version accounts for less than 10%. The company said it plans to strengthen promotion of the Ultra version to optimize the order mix.
Management said the all-new L9 and upcoming L8 will both be produced at the company’s Changzhou base, with flexible adjustment between production lines. May and June will be ramp-up months, with monthly capacity of 4,000 to 5,000 units. The company expects to deliver about 8,000 L9 units between mid-May and the end of June and said it is confident the new L9 can exceed the previous-generation L9’s delivery level after full ramp-up in the third quarter.
President Donghui Ma said the all-new Li L8 is planned for launch and delivery in June 2026. He described the L9 as a flagship six-seater and the L8 as a flagship five-seater. The new L8 will be larger than the previous generation, have an extended wheelbase, feature a five-seat layout and use the company’s in-house 1.5-liter turbocharged range extender system with a 72.7 kilowatt-hour 5C battery, the same battery as the new L9.
Focus on In-House Chips and AI Xiang Li said the all-new L9 marks Li Auto’s full deployment of its proprietary Mach M100 chip and MindVLA model. He described the Mach M100 as a five-nanometer automotive-grade AI inference chip and said the integrated hardware and software design delivers three times the effective computing power per unit cost.
CTO Yan Xie said Li Auto’s ADAS 9.0 system, powered by the in-house Mach M100 chip, shows significant improvements over ADAS 8.0, particularly in decision-making in complex scenarios and smoother longitudinal and lateral control. He said the company’s goal is to match the performance of Tesla’s FSD v14 in the U.S. in the second half of this year.
Xiang Li said Li Auto plans a separate June event focused on software and AI, including in-cabin interaction, foundation models, autonomous driving, system agents and the Mach chip. He also said competition in the mid- to high-end smart vehicle market over the next three to five years will center on embodied AI and the integration of chips and large foundational models.
International Expansion and Store Program Management said Li Auto is taking a phased approach to overseas expansion, using local subsidiaries, dealerships or sole distributors depending on market conditions. The company has signed contracts with distributors in Saudi Arabia and the United Arab Emirates and plans to enter Middle East and Central Asia markets in the third quarter with L-series range-extended models, starting with an overseas version of the new L9.
The company also plans to enter Macau, Cambodia, Laos and Myanmar starting in May, introduce the all-electric Li i6 in Europe in the second half of the year, and launch a right-hand-drive Li Mega in Hong Kong and Singapore by year-end.
On its Store Partner Program, management said giving store managers decision-making authority and profit-sharing rights has helped shift managers from “store executors” to “business operators.” The company said stores beat monthly sales targets on average in the first quarter, while also clearing inventory of the previous-generation L series and improving user satisfaction.
Xiang Li reaffirmed the company’s full-year sales growth target of 20%, citing the rollout of core technologies and updates to the product portfolio.
About Li Auto NASDAQ: LILi Auto Inc is a Chinese automotive company that develops, manufactures and sells smart electric vehicles, with an early focus on range-extended electric SUVs designed for family use. The company is headquartered in China and serves the domestic market through a combination of online channels and a network of retail/showroom locations. Li Auto was founded to address range-anxiety in electric vehicle buyers by integrating a small internal-combustion engine as a range extender alongside a large battery, enabling longer driving range while retaining electric driving characteristics.
The company's product lineup centers on multi‑occupant SUVs that combine electric propulsion, advanced in‑vehicle connectivity and driver‑assistance features.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
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BEIJING, China, May 29, 2026 (GLOBE NEWSWIRE) -- Li Auto Inc. (“Li Auto” or the “Company”) (Nasdaq: LI; HKEX: 2015), a leader in China’s new energy vehicle market, today announced that each of the proposed resolutions submitted for shareholder approval (the “Proposed Resolutions”) as set forth in the notice of annual general meeting dated April 22, 2026 (the “AGM Notice”) has been adopted at its annual general meeting of shareholders held in Beijing, China today.
After the adoption of the Proposed Resolutions, all corporate authorizations and actions contemplated thereunder are approved, including, among other things, that (i) the Company’s existing memorandum and articles of associations are amended and restated by their deletion in their entirety and by the substitution in their place of the seventh amended and restated memorandum and articles of association as set forth in the circular of the Company dated April 22, 2026, (ii) Mr. Donghui Ma, Mr. Tie Li, and Mr. Hongqiang Zhao are re-elected as directors of the Company, and (iii) the directors of the Company are granted a general mandate to issue, allot, and deal with additional Class A ordinary shares or equivalents and a general mandate to repurchase the Company’s own shares, respectively, on the terms and in the periods as set out in the AGM Notice.
About Li Auto Inc.
Li Auto Inc. is a leader in China’s new energy vehicle market. The Company designs, develops, manufactures, and sells premium smart electric vehicles. Its mission is: Be Proactive, Change the World. Through innovations in product, technology, and business model, the Company provides families with safe, convenient, and comfortable products and services. Li Auto is a pioneer in successfully commercializing extended-range electric vehicles in China. While firmly advancing along this technological route, it builds platforms for battery electric vehicles in parallel. The Company leverages technology to create value for users. It concentrates its in-house development efforts on proprietary range extension systems, innovative electric vehicle technologies, and smart vehicle solutions. The Company started volume production in November 2019. Its current model lineup includes a high-tech flagship family MPV, four Li L series extended-range electric SUVs, and two Li i series battery electric SUVs. The Company will continue to expand its product lineup to target a broader user base.
For more information, please visit: https://ir.lixiang.com.
BEIJING, China, June 01, 2026 (GLOBE NEWSWIRE) -- Li Auto Inc. (“Li Auto” or the “Company”) (Nasdaq: LI; HKEX: 2015), a leader in China's new energy vehicle market, today announced that it delivered 33,350 vehicles in May 2026. As of May 31, 2026, Li Auto's cumulative deliveries reached 1,702,792.
On June 01, 2026, Li Auto Inc LI shares fell 3.1% to a current price of $14.54. The stock has traded within a 52-week range of $14.53 to $32.03, reflecting significant volatility and a challenging year for the company.
GF Value™ verdict: Current price of $14.54 is 37.2% below the GF Value™ estimate of $23.16, indicating undervaluation. GF Score™ of 76/100 suggests that the company is above average in terms of overall performance. Most notable signal: There have been no insider transactions in the last 3 months, which may indicate a lack of confidence from insiders. Is LI Overvalued or Undervalued? Li Auto Inc LI is currently trading at $14.54, significantly below its GF Value™ estimate of $23.16. This 37.2% margin of safety suggests that the stock is undervalued in the eyes of the GF Value™ metric. However, it is important to note that the GF Valuation label indicates that this could be a possible value trap, advising caution before making any investment decisions. GF Value™ is GuruFocus' proprietary measure of intrinsic value, calculated from historical trading multiples, past business growth, and future performance estimates.
The undervaluation presents an opportunity, but potential investors should consider the overall market conditions and the company's recent performance, which has seen a significant decline of 48.7% over the past year. This raises questions about the sustainability of its future growth and profitability.
How Does LI's Valuation Compare to Its History? Metric Current Historical P/E (TTM) 89.2x 27.0x (5-Year Median) Li Auto's current P/E ratio of 89.2x is significantly higher than its 5-year median P/E of 27.0x, indicating that the stock is trading above its historical valuation metrics. This discrepancy raises concerns about whether the current price reflects the company's true value, aligning with the GF Value™ assessment that suggests caution due to potential overvaluation risks in the current market environment.
What Does LI's GF Score™ Tell Us? Metric Rating GF Score™ 76 Financial Strength 6/10 Profitability 4/10 Growth 10/10 Valuation 4/10 Momentum 4/10 The GF Score™ of 76/100 indicates that Li Auto is performing above average relative to its peers. The strongest aspect of the score is its Growth Rank of 10/10, suggesting strong potential for future expansion. However, the weakest area is the Profitability Rank of 4/10, which highlights challenges in converting growth into profits. The Valuation and Momentum Ranks further indicate that while growth is promising, valuation metrics and recent stock performance may not be as favorable.
What Are Insiders Doing with LI Stock? There have been no insider transactions in the last 3 months for Li Auto Inc LI . This absence of insider activity may suggest a lack of confidence among executives regarding the company's near-term prospects or could indicate that insiders are awaiting more favorable conditions before making any transactions.
What This Means for Investors Based on the GF Value™ assessment, Li Auto Inc LI is currently undervalued at a price of $14.54 compared to its GF Value™ estimate of $23.16. However, investors should proceed with caution due to potential risks highlighted by the GF Valuation label, which identifies the stock as a possible value trap.
For the complete analysis, visit the Li Auto Inc LI stock page. You can also explore the GF Value™ page for detailed valuation methodology, or use the GuruFocus Stock Screener to find similar opportunities.
Frequently Asked Questions What is LI's GF Score™?
LI's GF Score™ is 76/100, indicating that the company performs above average compared to its peers based on key financial metrics.
Is LI overvalued or undervalued?
LI is currently undervalued, with a GF Value™ estimate of $23.16 compared to its current price of $14.54.
What is LI's P/E ratio?
LI's P/E (TTM) is 89.2x, which is significantly higher than its 5-year median P/E of 27.0x, indicating that the stock is trading above its historical valuation levels.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Assetmark Inc. boosted its holdings in NetEase, Inc. (NASDAQ:NTES – Free Report) by 169.5% in the fourth quarter, according to the company in its most recent 13F filing with the SEC. The fund owned 130,869 shares of the technology company’s stock after buying an additional 82,312 shares during the quarter. Assetmark Inc.’s holdings in NetEase were worth $18,010,000 at the end of the most recent quarter.
Other hedge funds have also bought and sold shares of the company. Cornerstone Planning Group LLC purchased a new position in NetEase in the 3rd quarter worth about $33,000. Steigerwald Gordon & Koch Inc. bought a new stake in shares of NetEase during the 3rd quarter valued at about $38,000. First Horizon Corp bought a new stake in shares of NetEase during the 3rd quarter valued at about $45,000. Mather Group LLC. bought a new stake in shares of NetEase during the 3rd quarter valued at about $46,000. Finally, Spire Wealth Management grew its stake in shares of NetEase by 29.2% during the 3rd quarter. Spire Wealth Management now owns 332 shares of the technology company’s stock valued at $50,000 after purchasing an additional 75 shares during the period. Hedge funds and other institutional investors own 11.07% of the company’s stock.
NetEase Trading Up 2.0% Shares of NASDAQ:NTES opened at $115.87 on Thursday. The stock has a 50 day moving average of $116.00 and a 200 day moving average of $131.99. The company has a market cap of $73.41 billion, a PE ratio of 15.79, a price-to-earnings-growth ratio of 1.46 and a beta of 0.76. NetEase, Inc. has a 12-month low of $96.88 and a 12-month high of $159.55.
NetEase Increases Dividend The business also recently disclosed a quarterly dividend, which was paid on Friday, March 27th. Investors of record on Monday, March 16th were paid a dividend of $1.16 per share. This is a boost from NetEase’s previous quarterly dividend of $0.57. The ex-dividend date was Monday, March 16th. This represents a $4.64 dividend on an annualized basis and a dividend yield of 4.0%. NetEase’s dividend payout ratio is presently 63.08%.
Wall Street Analyst Weigh In A number of equities research analysts have issued reports on NTES shares. Barclays cut their price target on NetEase from $135.00 to $132.00 and set an “equal weight” rating for the company in a research note on Thursday, February 12th. Benchmark restated a “buy” rating on shares of NetEase in a research note on Thursday, February 12th. Weiss Ratings restated a “hold (c)” rating on shares of NetEase in a research note on Monday, December 22nd. Morgan Stanley restated an “overweight” rating and set a $154.00 price target on shares of NetEase in a research note on Monday, March 2nd. Finally, Nomura cut their price target on NetEase from $160.00 to $155.00 and set a “buy” rating for the company in a research note on Friday, February 13th. Eight analysts have rated the stock with a Buy rating and three have given a Hold rating to the company’s stock. According to MarketBeat.com, the company presently has a consensus rating of “Moderate Buy” and an average target price of $153.89.
Get Our Latest Stock Analysis on NTES
About NetEase (Free Report)
NetEase, Inc (NASDAQ: NTES) is a Chinese technology company headquartered in Hangzhou that develops and operates Internet services and products. Founded in 1997 by William Ding (Ding Lei), the company has grown from an early web portal and e-mail provider into a diversified online services group. William Ding has served as the company’s founder and long-time leader, guiding its expansion into games, digital content and consumer services.
The company’s primary business is interactive entertainment: NetEase Games designs, develops and publishes PC and mobile games for domestic and international audiences, offering a mix of self-developed franchises and titles published under licensing and strategic partnerships.
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NetEase is rated as a Buy, with an estimated fair price of $141.7, 24.2% above the current price, even after discounting risks. NTES will be able to increase revenue thanks to its successful global expansion and longer-lasting live service games, while it will increase its margins from AI efficiency gains and lower distribution costs. The worries of AI being a disruptor for online games are overstated. To truly leverage AI will require vast asset and data libraries, as well as operational expertise.
The Amplify Video Game Leaders ETF (GAMR) posted a 10.23% return in April as the gaming exchange traded fund captured a rally in AI-driven chip stocks and digital platforms that power the industry.
Key Takeaways: GAMR gained 10.23% in April as AMD surged 68.64% and contributed 7.23 points to returns. Technology holdings added 10.39% while consumer discretionary subtracted 0.80%. Nintendo and Sony declined while infrastructure plays NVIDIA and Unity rallied. The performance reflects a shift toward gaming infrastructure over content, with the technology sector contributing 10.39% to the index’s return while consumer discretionary holdings subtracted 0.80%, according to VettaFi index data for April.
Advanced Micro Devices Inc. (AMD), which supplies processors for gaming consoles and PCs, surged 74.3% and contributed 7.23 percentage points to the fund’s April return, per VettaFi. The chipmaker announced a multi-year collaboration with the French government on April 16 to accelerate local AI innovation and supercomputing, according to Motley Fool. AMD closed the month at $360.54.
Other chip stocks also rallied. Nvidia Corp. (NVDA), a graphics processing unit maker, gained 13.6% and added 1.38 points to the index, VettaFi data showed.
Meanwhile, Microsoft Corp. (MSFT), which owns Xbox and publishes games including Call of Duty, climbed 10.4% and contributed one point. The company reported fiscal third quarter earnings in April with EPS of $4.27 beating the $4.07 estimate. Cloud and AI revenue reached a $37 billion annual run rate, according to data from CNBC.
Meta Platforms Inc. (META), which operates virtual reality gaming through its Quest headsets, rose 5.6% and added 0.68 points. The company reported Q1 revenue of $56.31 billion on April 29, jumping 33.1% year-over-year and exceeding the $51.3 billion consensus, per MarketBeat.
Mobile advertising platforms also delivered gains. AppLovin Corp. (APP), a mobile app monetization platform, rallied 15.1% and contributed 0.70 points, according to VettaFi data. Analyst upgrades from Macquarie and Argus cited a “multi-year growth opportunity” in AI-driven mobile advertising, per Motley Fool.
Unity Software Inc. (U), which provides game development tools and engines, jumped 20.3% and added 0.57 points to returns. Electronic Arts Inc. (EA), publisher of franchises including FIFA and Madden, slipped 0.6% but had minimal impact with a 0.03-point drag.
Hardware Stocks Outpace Game Publishers Traditional game publishers weighed on performance. Nintendo Co. (7974:TKS), maker of the Switch console and franchises including Mario and Zelda, fell 13.7% and subtracted 0.64 points from the index, according to VettaFi. Sony Group Corp. (6758:TKS), which manufactures the PlayStation console, declined 6.6% and dragged returns by 0.32 points.
The media and communications sector, which includes publishers and streaming platforms, contributed just 0.65 points despite a 0.41 weighting in the fund. Tencent Holdings, the Chinese conglomerate behind games including Honor of Kings, dropped 5.8% and subtracted 0.47 points.
The technology sector’s 28.4% return in April outpaced consumer discretionary’s 4.4% decline by more than 30 percentage points, VettaFi data showed.
The March quarterly rebalance added exposure to infrastructure plays. The fund increased Electronic Arts to a 5.0% weight and Unity Software to 2.5%, while trimming NVIDIA and Meta to maintain 10% caps.
See more: GAMR Rebalance Highlights Gaming Stock Rotation
The rebalance also swapped U.S.-listed NetEase Inc. (NTES) for Hong Kong-listed NetEase Inc. (9999:HKG), reflecting a preference for primary listings where price discovery ties more closely to home markets. The $37.5 million fund holds 20 positions with a 0.59% expense ratio.
For more news, information, and analysis visit the Thematic Investing Content Hub.
VettaFi LLC (“VettaFi”) is the index provider for GAMR, for which it receives an index licensing fee. However, GAMR is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of GAMR.
, /PRNewswire/ -- Youdao, Inc. ("Youdao" or the "Company") (NYSE: DAO), an AI solutions provider specializing in learning and advertising, today announced that it will report its first quarter 2026 financial results on Thursday, May 21, 2026, before the open of the U.S. markets.
The earnings teleconference call with simultaneous webcast will take place at 6:00 a.m. Eastern Time on Thursday, May 21, 2026 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, May 21, 2026). Youdao's management will be on the call to discuss the quarterly results and answer questions.
Dial-in details for the earnings conference call are as follows:
United States (toll free):
+1-888-346-8982
International:
+1-412-902-4272
Mainland China (toll free):
400-120-1203
Hong Kong (toll free):
800-905-945
Conference ID:
5620376
A live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.youdao.com.
A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until May 28, 2026:
United States:
+1-855-669-9658
International:
+1-412-317-0088
Replay Access Code:
5620376
About Youdao, Inc.
Youdao, Inc. (NYSE: DAO) is strategically positioned as an AI solutions provider specializing in learning and advertising. Youdao mainly offers learning services, online marketing services and smart devices – all powered by advanced technologies. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.
For more information, please visit: http://ir.youdao.com.
For investor and media inquiries, please contact:
In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8163 ext. 89980
E-mail: [email protected]
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
E-mail: [email protected]
, /PRNewswire/ -- NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase" or the "Company"), a leading internet and game services provider, today announced that it will report financial results for the 2026 first quarter on Thursday, May 21, 2026, before the open of the U.S. markets.
The earnings teleconference call with simultaneous webcast will take place at 8:00 a.m. Eastern Time on Thursday, May 21, 2026 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, May 21, 2026). NetEase's management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10054538, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10054538. The replay will be available through May 28, 2026.
This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase's Investor Relations website at http://ir.netease.com/.
About NetEase, Inc.
NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase") is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest-running mobile and PC games available in China and globally.
Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.
Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning and advertising solutions provider, and NetEase Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase's private-label consumer lifestyle brand.
For more information, please visit: http://ir.netease.com/.
On May 13, 2026, we delve into the DCF analysis for NetEase Inc NTES , a company currently trading at $117.00. The stock has experienced a mixed performance recently, with a year-to-date decline of 14.1% but a year-over-year increase of 12.6%. Here are some key points to consider:
DCF Earnings-based intrinsic value of $186.78 vs current price of $117.00 (margin of safety: 37.4%) DCF FCF-based intrinsic value of $320.05 vs current price (second opinion) GF Score™ of 97/100, indicating high reliability of the DCF inputs What Is NTES Worth? DCF Earnings-Based Model The DCF earnings-based model for NetEase Inc estimates the intrinsic value by projecting future earnings growth and discounting them to present value. The model assumes a 10-year growth phase followed by a terminal phase. Below are the key assumptions used in this analysis:
Parameter Value Current EPS (TTM, excl. non-recurring) $7.82 10-Year Growth Rate 16.0% 10-Year Treasury Rate 4.33% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% The two-stage DCF model consists of a growth phase for the first 10 years, where EPS is expected to grow at 16.0% per year, followed by a terminal phase with a growth rate of 4% for the subsequent 10 years. The calculation summary is as follows:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 16.0%, discounted at 11% $100.40 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $86.37 Intrinsic Value Growth + Terminal $186.77 With the current price at $117.00, the intrinsic value of $186.78 indicates that the stock is significantly undervalued, with a margin of safety of 37.4%. It is important to note that GuruFocus utilizes EPS without non-recurring items, as research indicates a stronger correlation between stock prices and earnings than with free cash flow. For further details, visit the NTES DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF) based intrinsic value for NetEase Inc is calculated at $320.05. This valuation provides a second perspective on the company's worth. When comparing the FCF-based intrinsic value with the earnings-based intrinsic value, both models indicate that NetEase is significantly undervalued, with a margin of safety of 63.4%.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for NetEase Inc is calculated at $117.94, suggesting that the stock is slightly undervalued by 0.8%. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. All three models—the DCF earnings, DCF FCF, and GF Value™—indicate that NetEase is undervalued, reinforcing the findings from the DCF analyses. For more information, visit the GF Value™ page.
What Does NTES's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been shown to generate higher long-term returns based on backtested data from 2006 to 2021. Below is the breakdown of NTES's GF Score™:
Metric Rating GF Score™ 97/100 Financial Strength 8/10 Profitability 10/10 Growth 10/10 Valuation 9/10 Momentum 5/10 With a predictability rank of 1/5 stars, it is important to note that higher predictability ratings lead to more reliable DCF model estimates for this stock. For more insights, visit the NTES stock page.
Key Assumptions and Limitations It is crucial to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Additionally, stocks with lower predictability ratings tend to produce less reliable DCF estimates. The terminal growth rate of 4% used in this analysis is a simplifying assumption that may not reflect actual future performance.
What This Means for Investors In synthesizing the findings from the three valuation models—DCF earnings, DCF FCF, and GF Value™—it is clear that NetEase Inc is significantly undervalued. Investors should consider these insights when evaluating their investment strategies. For the full DCF analysis, visit the NTES DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is NTES's intrinsic value based on DCF?
Answer: earnings-based $186.78, FCF-based $320.05
Is NTES overvalued or undervalued?
Answer: Based on DCF and GF Value™ consensus, NTES is undervalued.
How reliable is the DCF model for NTES?
Answer: The predictability rank is 1/5, indicating lower reliability for the DCF model.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
, /PRNewswire/ -- Youdao, Inc. ("Youdao" or the "Company") (NYSE: DAO), an AI solutions provider specializing in learning and advertising, today announced its unaudited financial results for the first quarter ended March 31, 2026.
First Quarter 2026 Financial Highlights
Total net revenues were RMB1.3 billion (US$195.4 million), representing a 3.8% increase from the same period in 2025.
- Net revenues from learning services were RMB627.5 million (US$91.0 million), representing a 4.2% increase from the same period in 2025.
- Net revenues from smart devices were RMB109.4 million (US$15.9 million), representing a 42.6% decrease from the same period in 2025.
- Net revenues from online marketing services were RMB611.1 million (US$88.6 million), representing a 20.9% increase from the same period in 2025. Gross margin was 44.7%, compared with 47.3% for the same period in 2025. Income from operations was RMB57.5 million (US$8.3 million), representing a 44.7% decrease from the same period in 2025. Basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders were RMB0.33 (US$0.05) and RMB0.32 (US$0.05), respectively, compared with RMB0.65 and RMB0.64 for the same period of 2025. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders were RMB0.38 (US$0.06) and RMB0.37 (US$0.05), respectively, compared with RMB0.69 and RMB0.68 for the same period of 2025. "We entered 2026 with solid momentum, delivering our fourth consecutive quarter of year-over-year revenue growth and seventh consecutive quarter of operating profitability. Our operating margin improved sequentially, and operating cash flow strengthened significantly. At the same time, our strategic initiatives continued to gain traction, with both Youdao Lingshi gross billings and online marketing services revenue growing over 20% year-over-year. We also expanded our AI Agent matrix with the launches of LobsterAI and Youdao Baoku, extending the capabilities of our proprietary Confucius LLM across learning and productivity scenarios," said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao.
"Looking ahead, we remain firmly committed to our AI-Native Strategy. By continuously refining our vertical large language models for learning and advertising, and by expanding our portfolio of AI-native agents, we are enhancing how users learn, work and market. We will continue to improve user experience while driving sustainable progress in profitability and cash flow throughout the year," Dr. Zhou concluded.
First Quarter 2026 Financial Results
Net Revenues
Net revenues for the first quarter of 2026 were RMB1.3 billion (US$195.4 million), representing a 3.8% increase from RMB1.3 billion for the same period of 2025.
Net revenues from learning services were RMB627.5 million (US$91.0 million) for the first quarter of 2026, representing a 4.2% increase from RMB602.4 million for the same period of 2025.
Net revenues from smart devices were RMB109.4 million (US$15.9 million) for the first quarter of 2026, representing a 42.6% decrease from RMB190.5 million for the same period of 2025, primarily due to a decline in demand for smart learning devices in the first quarter of 2026.
Net revenues from online marketing services were RMB611.1 million (US$88.6 million) for the first quarter of 2026, representing a 20.9% increase from RMB505.4 million for the same period of 2025. The year-over-year increase was mainly attributable to increased demand for performance-based advertisements through third parties' internet properties, which was driven by Youdao's continued investments in AI technology.
Gross Profit and Gross Margin
Gross profit for the first quarter of 2026 was RMB602.3 million (US$87.3 million), largely flat compared with RMB614.2 million for the same period of 2025. Gross margin was 44.7% for the first quarter of 2026, compared with 47.3% for the same period of 2025. The decrease was mainly due to the decline in gross profit margin of smart devices.
Gross margin for learning services was 60.2% for the first quarter of 2026, compared with 59.8% for the same period of 2025.
Gross margin for smart devices was 39.9% for the first quarter of 2026, compared with 52.3% for the same period of 2025. The decrease was mainly attributable to increased bill of materials cost for smart devices.
Gross margin for online marketing services was 29.6% for the first quarter of 2026, compared with 30.5% for the same period of 2025.
Operating Expenses
Total operating expenses for the first quarter of 2026 were RMB544.8 million (US$79.0 million), compared with RMB510.2 million for the same period of last year.
Sales and marketing expenses for the first quarter of 2026 were RMB382.2 million (US$55.4 million), representing an increase of 6.9% from RMB357.6 million for the same period of 2025. This increase was primarily driven by increasing sales and marketing efforts, as well as increased payroll-related expenses and outsourcing labor service fees associated with learning services in the first quarter of 2026.
Research and development expenses for the first quarter of 2026 were RMB115.4 million (US$16.7 million), remaining stable with the same period of 2025.
General and administrative expenses for the first quarter of 2026 were RMB47.2 million (US$6.8 million), representing an increase of 27.4% from RMB37.1 million for the same period of 2025. The increase was mainly attributable to an increase in expected credit losses on the Company's accounts receivables in the first quarter of 2026.
Income from Operations
As a result of the foregoing, income from operations for the first quarter of 2026 was RMB57.5 million (US$8.3 million), compared with RMB104.0 million for the same period in 2025. The margin of income from operations was 4.3%, compared with 8.0% for the same period of last year.
Net Income Attributable to Youdao's Ordinary Shareholders
Net income attributable to Youdao's ordinary shareholders for the first quarter of 2026 was RMB38.6 million (US$5.6 million), compared with RMB76.7 million for the same period of last year. Non-GAAP net income attributable to Youdao's ordinary shareholders for the first quarter of 2026 was RMB44.9 million (US$6.5 million), compared with RMB81.7 million for the same period of last year.
Basic and diluted net income per ADS attributable to ordinary shareholders for the first quarter of 2026 were RMB0.33 (US$0.05) and RMB0.32 (US$0.05), respectively, compared with RMB0.65 and RMB0.64 for the same period of 2025. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders were RMB0.38 (US$0.06) and RMB0.37 (US$0.05), respectively, compared with RMB0.69 and RMB0.68 for the same period of 2025.
Other Information
As of March 31, 2026, Youdao's cash, cash equivalents, current and non-current restricted cash, and short-term investments totaled RMB515.2 million (US$74.7 million), compared with RMB743.2 million as of December 31, 2025. For the first quarter of 2026, net cash used in operating activities was RMB93.1 million (US$13.5 million). Youdao's ability to continue as a going concern is dependent on management's ability to implement an effective business plan amid a changing regulatory environment, generate operating cash flows, and secure external financing for future development. As of March 31, 2026, Youdao has received various forms of financial support from NetEase Group, including, among others, RMB878.0 million in short-term loan, and US$118.0 million in long-term loans maturing on March 31, 2027, drawn from a US$300.0 million revolving loan facility. In April 2026, the Company and NetEase Group both approved an extension of the maturity date of the aforementioned US$300.0 million revolving loan facility to March 31, 2030, including the loans already drawn from it.
As of March 31, 2026, the Company's contract liabilities, which mainly consisted of deferred revenues generated from Youdao's learning services, were RMB667.0 million (US$96.7 million), compared with RMB847.7 million as of December 31, 2025.
Share Repurchase Program
On November 17, 2022, the Company announced that its Board of Directors had authorized the Company to adopt a share repurchase program in accordance with applicable laws and regulations for up to US$20.0 million of its Class A ordinary shares (including in the form of ADSs) during a period of up to 36 months beginning on November 18, 2022. This amount was subsequently increased to US$40.0 million in August 2023. In November 2025, the Board approved an amendment to this Program to extend its original expiration date by one year to November 17, 2026. As of March 31, 2026, the Company had repurchased a total of approximately 7.5 million ADSs in the open market under the share repurchase program for a total consideration of approximately US$33.8 million.
Conference Call
Youdao's management team will host a teleconference call with a simultaneous webcast at 6:00 a.m. Eastern Time on Thursday, May 21, 2026 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, May 21, 2026). Youdao's management will be on the call to discuss the financial results and answer questions.
Dial-in details for the earnings conference call are as follows:
United States (toll free):
+1-888-346-8982
International:
+1-412-902-4272
Mainland China (toll free):
400-120-1203
Hong Kong (toll free):
800-905-945
Conference ID:
5620376
A live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.youdao.com.
A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until May 28, 2026:
United States:
+1-855-669-9658
International:
+1-412-317-0088
Replay Access Code:
5620376
About Youdao, Inc.
Youdao, Inc. (NYSE: DAO) is strategically positioned as an AI solutions provider specializing in learning and advertising. Youdao mainly offers learning services, online marketing services and smart devices – all powered by advanced technologies. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.
For more information, please visit: http://ir.youdao.com.
Non-GAAP Measures
Youdao considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company's ordinary shareholders and non-GAAP basic and diluted net income per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Youdao defines non-GAAP net income attributable to the Company's ordinary shareholders as net income attributable to the Company's ordinary shareholders excluding share-based compensation expenses, gain from fair value change of long-term investment and adjustment for GAAP to non-GAAP reconciling item for the (income)/loss attributable to noncontrolling interests. Non-GAAP net income attributable to the Company's ordinary shareholders enables Youdao's management to assess its operating results without considering the impact of these items, which are non-cash charges in nature. Youdao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose.
Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools, which possibly do not reflect all items of expense that affect our operations. In addition, the non-GAAP financial measures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparability may be limited.
For more information on these non-GAAP financial measures, please see the table captioned "Unaudited Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this release.
The accompanying table has more details on the reconciliation between our GAAP financial measures that are mostly directly comparable to non-GAAP financial measures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.8980 to US$1.00, the exchange rate on March 31, 2026 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred to could be converted into US$ or RMB, as the case may be, at any particular rate or at all.
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Further information regarding such risks, uncertainties or factors is included in the Company's filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8163 ext. 89980
E-mail: [email protected]
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
E-mail: [email protected]
In the United States:
Piacente Financial Communications
Brandi Piacente
Tel: +1-212-481-2050
E-mail: [email protected]
YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(RMB and USD in thousands)
As of December 31,
As of March 31,
As of March 31,
2025
2026
2026
RMB
RMB
USD (1)
Assets
Current assets:
Cash and cash equivalents
439,731
315,226
45,698
Restricted cash
1,990
1,846
268
Short-term investments
298,290
194,923
28,258
Accounts receivable, net
381,243
326,381
47,315
Inventories
140,776
116,763
16,927
Amounts due from NetEase Group
321,359
315,795
45,781
Prepayment and other current assets
139,117
149,084
21,612
Total current assets
1,722,506
1,420,018
205,859
Non-current assets:
Property, equipment and software, net
44,603
41,850
6,067
Operating lease right-of-use assets, net
46,943
49,797
7,219
Long-term investments
19,811
21,141
3,065
Goodwill
109,944
109,944
15,939
Other assets, net
31,238
30,233
4,382
Total non-current assets
252,539
252,965
36,672
Total assets
1,975,045
1,672,983
242,531
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payables
110,003
83,510
12,106
Payroll payable
294,824
162,205
23,515
Amounts due to NetEase Group
22,818
32,770
4,751
Contract liabilities
847,707
666,968
96,690
Taxes payable
43,515
86,528
12,544
Accrued liabilities and other payables
738,045
803,955
116,549
Short-term loan from NetEase Group
878,000
878,000
127,283
Total current liabilities
2,934,912
2,713,936
393,438
Non-current liabilities:
Long-term lease liabilities
18,840
21,372
3,098
Long-term loans from NetEase Group
926,588
814,866
118,131
Other non-current liabilities
28,802
24,475
3,548
Total non-current liabilities
974,230
860,713
124,777
Total liabilities
3,909,142
3,574,649
518,215
Shareholders' deficit:
Youdao's shareholders' deficit
(1,974,058)
(1,935,937)
(280,652)
Noncontrolling interests
39,961
34,271
4,968
Total shareholders' deficit
(1,934,097)
(1,901,666)
(275,684)
Total liabilities and shareholders' deficit
1,975,045
1,672,983
242,531
Note 1:
The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.8980 on the last trading day of March (March 31, 2026) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.
YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(RMB and USD in thousands, except share and per ADS data)
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD (1)
Net revenues:
Learning services
602,414
727,233
627,477
90,965
Smart devices
190,498
176,545
109,405
15,860
Online marketing services
505,350
660,914
611,140
88,597
Total net revenues
1,298,262
1,564,692
1,348,022
195,422
Cost of revenues (2)
(684,035)
(859,314)
(745,729)
(108,108)
Gross profit
614,227
705,378
602,293
87,314
Operating expenses:
Sales and marketing expenses (2)
(357,641)
(437,143)
(382,183)
(55,405)
Research and development expenses (2)
(115,474)
(142,645)
(115,371)
(16,725)
General and administrative expenses (2)
(37,071)
(65,387)
(47,238)
(6,848)
Total operating expenses
(510,186)
(645,175)
(544,792)
(78,978)
Income from operations
104,041
60,203
57,501
8,336
Interest income
517
825
935
136
Interest expense
(16,104)
(14,919)
(13,609)
(1,973)
Others, net
(960)
(10,665)
3,483
504
Income before tax
87,494
35,444
48,310
7,003
Income tax (expenses)/benefits
(9,895)
510
(4,497)
(652)
Net income
77,599
35,954
43,813
6,351
Net (income)/loss attributable to noncontrolling interests
(856)
12,292
(5,236)
(759)
Net income attributable to ordinary shareholders of the Company
76,743
48,246
38,577
5,592
Basic net income per ADS
0.65
0.41
0.33
0.05
Diluted net income per ADS
0.64
0.40
0.32
0.05
Shares used in computing basic net income per ADS
117,594,976
118,601,505
118,671,804
118,671,804
Shares used in computing diluted net income per ADS
119,504,097
120,288,530
120,444,180
120,444,180
Note 1:
The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.8980 on the last trading day of March (March 31, 2026) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.
Note 2:
Share-based compensation in each category:
Cost of revenues
612
362
300
43
Sales and marketing expenses
728
792
1,300
188
Research and development expenses
2,352
9,723
4,781
693
General and administrative expenses
1,538
2,647
2,241
326
YOUDAO, INC.
UNAUDITED ADDITIONAL INFORMATION
(RMB and USD in thousands)
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD
Net revenues
Learning services
602,414
727,233
627,477
90,965
Smart devices
190,498
176,545
109,405
15,860
Online marketing services
505,350
660,914
611,140
88,597
Total net revenues
1,298,262
1,564,692
1,348,022
195,422
Cost of revenues
Learning services
242,111
272,528
250,027
36,247
Smart devices
90,851
109,291
65,713
9,526
Online marketing services
351,073
477,495
429,989
62,335
Total cost of revenues
684,035
859,314
745,729
108,108
Gross margin
Learning services
59.8 %
62.5 %
60.2 %
60.2 %
Smart devices
52.3 %
38.1 %
39.9 %
39.9 %
Online marketing services
30.5 %
27.8 %
29.6 %
29.6 %
Total gross margin
47.3 %
45.1 %
44.7 %
44.7 %
YOUDAO, INC.
UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(RMB and USD in thousands, except share and per ADS data)
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD
Net income attributable to ordinary shareholders of the Company
76,743
48,246
38,577
5,592
Add: share-based compensation
5,230
13,524
8,622
1,250
Less: gain from fair value change of long-term investment
-
-
(1,339)
(194)
Less: GAAP to non-GAAP reconciling item for the (income)/loss attributable to noncontrolling interests
(297)
(3,024)
(970)
(141)
Non-GAAP net income attributable to ordinary shareholders of the Company
81,676
58,746
44,890
6,507
Non-GAAP basic net income per ADS
0.69
0.50
0.38
0.06
Non-GAAP diluted net income per ADS
0.68
0.49
0.37
0.05
Shares used in computing non-GAAP basic net income per ADS
117,594,976
118,601,505
118,671,804
118,671,804
Shares used in computing non-GAAP diluted net income per ADS
, /PRNewswire/ -- NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase" or the "Company"), a leading internet and game services provider, today announced its unaudited financial results for the first quarter ended March 31, 2026.
First Quarter 2026 Financial Highlights
Net revenues were RMB30.6 billion (US$4.4 billion), an increase of 6.1% compared with the same quarter of 2025. Games and related value-added services net revenues were RMB25.7 billion (US$3.7 billion), an increase of 6.9% compared with the same quarter of 2025. Youdao net revenues were RMB1.3 billion (US$195.4 million), an increase of 3.8% compared with the same quarter of 2025. NetEase Cloud Music net revenues were RMB2.0 billion (US$287.2 million), an increase of 6.6% compared with the same quarter of 2025. Innovative businesses and others net revenues were RMB1.5 billion (US$224.6 million), a decrease of 4.6% compared with the same quarter of 2025. Gross profit was RMB21.2 billion (US$3.1 billion), an increase of 14.8% compared with the same quarter of 2025. Total operating expenses were RMB8.6 billion (US$1.2 billion), an increase of 6.5% compared with the same quarter of 2025. Net income attributable to the Company's shareholders was RMB10.7 billion (US$1.5 billion). Non-GAAP net income attributable to the Company's shareholders was RMB11.3 billion (US$1.6 billion).[1] Basic net income per share was US$0.48 (US$2.42 per ADS). Non-GAAP basic net income per share was US$0.51 (US$2.56 per ADS).[1] [1] As used in this announcement, non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement.
First Quarter 2026 and Recent Operational Highlights
Sustained strong engagement and revenue performance across established titles, including the Fantasy Westward Journey franchise, Identity V, Eggy Party, Sword of Justice and Where Winds Meet, supported by high-cadence content updates and gameplay innovation. Advanced global expansion through key titles, such as Where Winds Meet and Marvel Rivals, amplifying their international reach and deepening player engagement. Blizzard titles maintained stable operations in China with a steady rollout of localized content. "For the first quarter of 2026, we delivered another solid quarter across our established gaming portfolio, while continuing to make steady progress advancing our pipeline of new titles," said Mr. William Ding, Chief Executive Officer and Director of NetEase. "Our recent global launches have demonstrated strong cross-market appeal, supporting the continued execution of our international expansion strategy.
"Looking ahead, we will continue to strengthen our technological capabilities and focus on innovation across both content and development. By combining evolving technologies with our deep operating expertise, we aim to create exceptional content and experiences that exceed players' expectations and reach an even broader global audience," Mr. Ding concluded.
First Quarter 2026 Financial Results
Net Revenues
Net revenues for the first quarter of 2026 were RMB30.6 billion (US$4.4 billion), compared with RMB27.5 billion and RMB28.8 billion for the preceding quarter and the same quarter of 2025, respectively.
Net revenues from games and related value-added services were RMB25.7 billion (US$3.7 billion) for the first quarter of 2026, compared with RMB22.0 billion and RMB24.0 billion for the preceding quarter and the same quarter of 2025, respectively. Net revenues from the operation of online games accounted for approximately 97.5% of the segment's net revenues for the first quarter of 2026, compared with 96.8% and 97.5% for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter and year-over-year increases were attributable to higher net revenues from self-developed games, such as the Fantasy Westward Journey franchise and Where Winds Meet.
Net revenues from Youdao were RMB1.3 billion (US$195.4 million) for the first quarter of 2026, compared with RMB1.6 billion and RMB1.3 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was mainly due to decreased net revenues from its learning services and smart devices.
Net revenues from NetEase Cloud Music were RMB2.0 billion (US$287.2 million) for the first quarter of 2026, compared with RMB2.0 billion and RMB1.9 billion for the preceding quarter and the same quarter of 2025, respectively.
Net revenues from innovative businesses and others were RMB1.5 billion (US$224.6 million) for the first quarter of 2026, compared with RMB2.0 billion and RMB1.6 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was led by decreased net revenues from e-commerce and advertising businesses.
Cost of Revenues
Cost of revenues for the first quarter of 2026 was RMB9.4 billion (US$1.4 billion), compared with RMB9.9 billion and RMB10.3 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was mainly due to lower product costs. The year-over-year decrease was mainly due to lower revenue-sharing costs related to platforms.
Gross Profit
Gross profit for the first quarter of 2026 was RMB21.2 billion (US$3.1 billion), compared with RMB17.7 billion and RMB18.5 billion for the preceding quarter and the same quarter of 2025, respectively.
Operating Expenses
Total operating expenses for the first quarter of 2026 were RMB8.6 billion (US$1.2 billion), compared with RMB9.4 billion and RMB8.0 billion for the preceding quarter and the same quarter of 2025, respectively. The variances in both the quarter-over-quarter and year-over-year results were primarily attributable to fluctuations in marketing expenses and general and administrative expenses.
Other Income/(Expenses)
Other income/(expenses) consisted of investment income/(loss), interest income, net exchange gains/(losses) and others. The quarter-over-quarter increase was mainly attributable to the gain from the disposal of certain long-term investments and lower investment impairment provisions in the first quarter of 2026. The year-over-year decrease was primarily due to fair value changes of equity security investments and higher foreign exchange losses recognized in the first quarter of 2026.
Income Tax
The Company recorded a net income tax charge of RMB2.5 billion (US$365.9 million) for the first quarter of 2026, compared with RMB1.3 billion and RMB1.9 billion for the preceding quarter and the same quarter of 2025, respectively. The effective tax rate for the first quarter of 2026 was 18.9%, compared with 16.4% and 15.3% for the preceding quarter and the same quarter of 2025, respectively. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter.
Net Income and Non-GAAP Net Income
Net income attributable to the Company's shareholders totaled RMB10.7 billion (US$1.5 billion) for the first quarter of 2026, compared with RMB6.2 billion and RMB10.3 billion for the preceding quarter and the same quarter of 2025, respectively.
Basic net income was US$0.48 per share (US$2.42 per ADS) for the first quarter of 2026, compared with US$0.28 per share (US$1.42 per ADS) and US$0.47 per share (US$2.35 per ADS) for the preceding quarter and the same quarter of 2025, respectively.
Non-GAAP net income attributable to the Company's shareholders totaled RMB11.3 billion (US$1.6 billion) for the first quarter of 2026, compared with RMB7.1 billion and RMB11.2 billion for the preceding quarter and the same quarter of 2025, respectively.
Non-GAAP basic net income was US$0.51 per share (US$2.56 per ADS) for the first quarter of 2026, compared with US$0.32 per share (US$1.61 per ADS) and US$0.51 per share (US$2.57 per ADS) for the preceding quarter and the same quarter of 2025, respectively.
Other Financial Information
As of March 31, 2026, the Company's net cash (total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus short-term and long-term loans) totaled RMB167.5 billion (US$24.3 billion), compared with RMB163.5 billion as of December 31, 2025. Net cash provided by operating activities was RMB13.7 billion (US$2.0 billion) for the first quarter of 2026, compared with RMB14.8 billion and RMB12.1 billion for the preceding quarter and the first quarter of 2025, respectively.
Quarterly Dividend
The board of directors approved a dividend of US$0.144 per share (US$0.720 per ADS) for the first quarter of 2026 to holders of ordinary shares and holders of ADSs as of the close of business on June 5, 2026, Beijing/Hong Kong Time and New York Time, respectively, payable in U.S. dollars. For holders of ordinary shares, in order to qualify for the dividend, all valid documents for the transfer of shares accompanied by the relevant share certificates must be lodged for registration with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, no later than 4:30 p.m. on June 5, 2026 (Beijing/Hong Kong Time). The payment date is expected to be June 15, 2026 for holders of ordinary shares and on or around June 18, 2026, for holders of ADSs.
NetEase paid a dividend of US$0.232 per share (US$1.16 per ADS) for the fourth quarter of 2025 in March 2026.
Under the Company's current dividend policy, the determination to make dividend distributions and the amount of such distribution in any particular quarter will be made at the discretion of its board of directors and will be based upon the Company's operations and earnings, cash flow, financial condition and other relevant factors.
Share Repurchase Program
On November 20, 2025, the Company announced the extension of its previously approved share repurchase program of up to US$5.0 billion of the Company's ADSs and ordinary shares in open market or other transactions for an additional 36 months until January 9, 2029. As of March 31, 2026, approximately 23.2 million ADSs had been repurchased under this program for a total cost of US$2.1 billion.
The extent to which NetEase repurchases its ADSs and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.
** The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.
Conference Call
NetEase's management team will host a teleconference call with a simultaneous webcast at 8:00 a.m. Eastern Time on Thursday, May 21, 2026 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, May 21, 2026). NetEase's management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10054538, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10054538. The replay will be available through May 28, 2026.
This call will be webcast live, and the replay will be available for 12 months. Both will be available on NetEase's Investor Relations website at http://ir.netease.com/.
About NetEase, Inc.
NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase") is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest-running mobile and PC games available in China and globally.
Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.
Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning and advertising solutions provider, and NetEase Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase's private-label consumer lifestyle brand.
For more information, please visit: http://ir.netease.com/.
Forward Looking Statements
This announcement contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions. In addition, statements that are not historical facts, including statements about NetEase's strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online games market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; risks associated with NetEase's business and operating strategies and its ability to implement such strategies; NetEase's ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in regulatory environment in the markets where NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; risks related to evolving economic cycles and geopolitical tensions, including the direct or indirect impacts of national trade, investment, protectionist, tax or other laws or policies as well as export controls and economic or trade sanctions; risks related to the expansion of NetEase's businesses and operations internationally; risks associated with cybersecurity threats or incidents; and fluctuations in foreign currency exchange rates that could adversely affect NetEase's business and financial results. Further information regarding these and other risks is included in NetEase's filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under applicable law.
Non-GAAP Financial Measures
NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per ADS and per share, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
NetEase defines non-GAAP net income attributable to the Company's shareholders as net income attributable to the Company's shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company's shareholders enables NetEase's management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that this non-GAAP financial measure provides useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors' assessment of its operating performance.
Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company's shareholders is that it does not reflect all items of expense/ income that affect our operations. Share-based compensation expenses have been and may continue to be incurred in NetEase's business and are not reflected in the presentation of non-GAAP net income attributable to the Company's shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.
NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company's shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.
Contact for Media and Investors:
Email: [email protected]
Tel: (+86) 571-8985-3378
NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
March 31,
March 31,
2025
2026
2026
RMB
RMB
USD (Note 1)
Assets
Current assets:
Cash and cash equivalents
47,167,904
50,815,211
7,366,659
Time deposits
92,639,378
80,109,903
11,613,497
Restricted cash
4,319,344
4,502,968
652,793
Accounts receivable, net
5,337,819
6,492,901
941,273
Inventories
689,183
546,030
79,158
Prepayments and other current assets, net
7,658,346
6,212,901
900,682
Short-term investments
22,803,503
39,978,723
5,795,698
Total current assets
180,615,477
188,658,637
27,349,760
Non-current assets:
Property, equipment and software, net
8,425,327
8,311,363
1,204,895
Land use rights, net
4,047,355
4,014,831
582,028
Deferred tax assets
2,831,423
2,894,530
419,619
Time deposits
2,995,000
3,045,000
441,432
Restricted cash
3,893
3,344
485
Other long-term assets
22,496,585
24,469,340
3,547,309
Total non-current assets
40,799,583
42,738,408
6,195,768
Total assets
221,415,060
231,397,045
33,545,528
Liabilities, Redeemable Noncontrolling Interests
and Shareholders' Equity
Current liabilities:
Accounts payable
643,164
780,921
113,210
Salary and welfare payables
4,889,708
2,642,579
383,094
Taxes payable
3,874,143
5,765,891
835,878
Short-term loans
6,384,417
10,955,460
1,588,208
Contract liabilities
20,514,540
21,811,530
3,162,008
Accrued liabilities and other payables
16,062,984
15,480,778
2,244,242
Total current liabilities
52,368,956
57,437,159
8,326,640
Non-current liabilities:
Deferred tax liabilities
2,637,258
3,232,494
468,613
Other long-term liabilities
1,304,837
1,377,929
199,758
Total non-current liabilities
3,942,095
4,610,423
668,371
Total liabilities
56,311,051
62,047,582
8,995,011
Redeemable noncontrolling interests
91,319
93,143
13,503
NetEase, Inc.'s shareholders' equity
160,296,119
164,722,217
23,879,707
Noncontrolling interests
4,716,571
4,534,103
657,307
Total equity
165,012,690
169,256,320
24,537,014
Total liabilities, redeemable noncontrolling
interests and shareholders' equity
221,415,060
231,397,045
33,545,528
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data or per ADS data)
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD (Note 1)
Net revenues
28,828,545
27,546,973
30,591,281
4,434,804
Cost of revenues
(10,349,139)
(9,854,598)
(9,374,209)
(1,358,975)
Gross profit
18,479,406
17,692,375
21,217,072
3,075,829
Operating expenses:
Selling and marketing expenses
(2,695,597)
(3,888,256)
(3,441,485)
(498,911)
General and administrative expenses
(956,337)
(1,050,701)
(636,597)
(92,287)
Research and development expenses
(4,386,313)
(4,434,260)
(4,482,157)
(649,776)
Total operating expenses
(8,038,247)
(9,373,217)
(8,560,239)
(1,240,974)
Operating profit
10,441,159
8,319,158
12,656,833
1,834,855
Other income/(expenses):
Investment income/(loss), net
692,751
(1,669,086)
5,472
793
Interest income, net
1,060,886
1,002,404
890,267
129,062
Exchange gains/(losses), net
1,803
(517,965)
(622,108)
(90,187)
Other, net
255,315
485,863
438,978
63,638
Income before tax
12,451,914
7,620,374
13,369,442
1,938,161
Income tax
(1,905,143)
(1,250,430)
(2,523,838)
(365,880)
Net income
10,546,771
6,369,944
10,845,604
1,572,281
Accretion of redeemable noncontrolling
interests
(1,049)
(1,122)
(1,104)
(160)
Net income attributable to noncontrolling
interests and redeemable noncontrolling
interests
(244,565)
(126,866)
(170,394)
(24,702)
Net income attributable to the
Company's shareholders
10,301,157
6,241,956
10,674,106
1,547,419
Net income per share *
Basic
3.25
1.96
3.34
0.48
Diluted
3.21
1.93
3.31
0.48
Net income per ADS *
Basic
16.23
9.78
16.69
2.42
Diluted
16.06
9.66
16.53
2.40
Weighted average number of ordinary
shares used in calculating net income
per share *
Basic
3,173,899
3,191,805
3,198,123
3,198,123
Diluted
3,206,362
3,227,907
3,227,325
3,227,325
* Each ADS represents five ordinary shares.
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD (Note 1)
Cash flows from operating activities:
Net income
10,546,771
6,369,944
10,845,604
1,572,281
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
480,761
720,367
430,583
62,421
Fair value changes of equity security, other investments and
financial instruments
(558,499)
1,308,861
1,117,717
162,035
Impairment losses on investments
89,071
857,796
344,871
49,996
Fair value changes of short-term investments
(201,609)
(283,560)
(385,395)
(55,871)
Share-based compensation cost
951,872
847,194
616,180
89,329
Allowance for expected credit losses
16,771
17,478
6,719
974
Losses/(gains) on disposal of property, equipment and software
20,293
(20,063)
(565)
(82)
Unrealized exchange (gains)/losses
(28,453)
514,469
643,942
93,352
Losses/(gains) on disposal of long-term investments and subsidiaries
11,675
(273,438)
(1,071,442)
(155,326)
Deferred income taxes
328,272
204,920
532,257
77,161
Share of results on equity method investees
(18,668)
153,645
442,575
64,160
Changes in operating assets and liabilities:
Accounts receivable
(1,088,960)
594,561
(1,188,837)
(172,345)
Inventories
53,773
(51,881)
143,099
20,745
Prepayments and other assets
(295,178)
701,921
116,152
16,839
Accounts payable
(148,076)
(59,225)
134,445
19,490
Salary and welfare payables
(2,085,111)
1,859,384
(2,253,559)
(326,698)
Taxes payable
1,796,123
(436,268)
1,895,324
274,764
Contract liabilities
2,526,198
1,048,151
1,384,445
200,702
Accrued liabilities and other payables
(290,374)
749,075
(21,044)
(3,051)
Net cash provided by operating activities
12,106,652
14,823,331
13,733,071
1,990,876
Cash flows from investing activities:
Purchase of property, equipment and software
(454,071)
(137,818)
(312,148)
(45,252)
Proceeds from sale of property, equipment and software
1,336
21,790
1,673
243
Purchase of intangible assets, content and licensed copyrights
(298,771)
(183,986)
(290,019)
(42,044)
Net changes of short-term investments with terms of three months or less
(6,138,556)
(400,836)
(15,766,308)
(2,285,635)
Purchase of short-term investments with terms over three months
(2,970,000)
(5,600,000)
(5,885,000)
(853,146)
Proceeds from maturities of short-term investments with terms over three months
2,708,601
7,695,328
4,861,483
704,767
Investment/prepayment for investment in long-term investments and
acquisition of subsidiaries
(90,966)
(1,617,947)
(3,204,395)
(464,540)
Proceeds from disposal of long-term investments and subsidiaries
77,428
624,662
1,353,947
196,281
Placement/rollover of matured time deposits
(49,601,807)
(39,787,587)
(30,608,133)
(4,437,247)
Proceeds from maturities of time deposits
43,926,482
39,781,381
42,018,869
6,091,457
Change in other long-term assets
(678)
(7,658)
65,909
9,555
Net cash (used in)/provided by investing activities
(12,841,002)
387,329
(7,764,122)
(1,125,561)
Cash flows from financing activities:
Net changes from loans with terms of three months or less
(2,254,415)
(56,405)
1,182,383
171,410
Proceeds of loans with terms over three months
2,747,550
92,700
6,134,520
889,319
Payment of loans with terms over three months
(2,935,677)
(975,000)
(2,620,900)
(379,951)
Net amounts received/(paid) related to capital contribution from or repurchase of
noncontrolling interests shareholders
42,517
819
(23,418)
(3,395)
Net amounts paid related to repurchase of NetEase's ADSs/purchase of
subsidiaries' shares
(303,601)
(15,398)
(1,314,003)
(190,490)
Dividends paid to NetEase's shareholders
(5,584,532)
(2,575,287)
(5,156,320)
(747,509)
Net cash used in financing activities
(8,288,158)
(3,528,571)
(1,797,738)
(260,616)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash held in foreign currencies
(56,932)
(175,895)
(340,829)
(49,410)
Net (decrease)/increase in cash, cash equivalents and restricted cash
(9,079,440)
11,506,194
3,830,382
555,289
Cash, cash equivalents and restricted cash, at the beginning of the period
54,474,923
39,984,947
51,491,141
7,464,648
Cash, cash equivalents and restricted cash, at the end of the period
45,395,483
51,491,141
55,321,523
8,019,937
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net
1,206,555
1,068,868
1,464,650
212,330
Cash paid for interest expenses
97,424
18,313
78,326
11,355
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED SEGMENT INFORMATION
(in thousands)
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD (Note 1)
Net revenues:
Games and related value-added services
24,048,007
21,966,634
25,712,975
3,727,598
Youdao
1,298,262
1,564,692
1,348,022
195,422
NetEase Cloud Music
1,858,388
1,968,270
1,981,234
287,219
Innovative businesses and others
1,623,888
2,047,377
1,549,050
224,565
Total net revenues
28,828,545
27,546,973
30,591,281
4,434,804
Cost of revenues:
Games and related value-added services
(7,495,262)
(6,472,229)
(6,482,431)
(939,755)
Youdao
(684,035)
(859,314)
(745,729)
(108,108)
NetEase Cloud Music
(1,175,777)
(1,285,937)
(1,247,066)
(180,787)
Innovative businesses and others
(994,065)
(1,237,118)
(898,983)
(130,325)
Total cost of revenues
(10,349,139)
(9,854,598)
(9,374,209)
(1,358,975)
Gross profit:
Games and related value-added services
16,552,745
15,494,405
19,230,544
2,787,843
Youdao
614,227
705,378
602,293
87,314
NetEase Cloud Music
682,611
682,333
734,168
106,432
Innovative businesses and others
629,823
810,259
650,067
94,240
Total gross profit
18,479,406
17,692,375
21,217,072
3,075,829
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
NOTES TO UNAUDITED FINANCIAL INFORMATION
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB 6.8980 on the last trading day of March 2026 (March 31, 2026) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on March 31, 2026, or at any other certain date.
Note 2: Share-based compensation cost reported in the Company's unaudited condensed consolidated statements of comprehensive income is set out as follows in RMB and USD (in thousands):
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD (Note 1)
Share-based compensation cost included in:
Cost of revenues
233,711
212,072
269,336
39,046
Operating expenses
718,161
635,122
346,844
50,283
The accompanying notes are an integral part of this announcement.
Note 3: The financial information prepared and presented in this announcement might be different from those published and to be published by NetEase's listed subsidiary to meet the disclosure requirements under different accounting standards requirements.
Note 4: The unaudited reconciliation of GAAP and non-GAAP results is set out as follows in RMB and USD (in thousands, except per share data or per ADS data):
Three Months Ended
March 31,
December 31,
March 31,
March 31,
2025
2025
2026
2026
RMB
RMB
RMB
USD (Note 1)
Net income attributable to the Company's shareholders
10,301,157
6,241,956
10,674,106
1,547,419
Add: Share-based compensation
935,570
831,031
600,718
87,086
Non-GAAP net income attributable to the Company's shareholders
11,236,727
7,072,987
11,274,824
1,634,505
Non-GAAP net income per share *
Basic
3.54
2.22
3.53
0.51
Diluted
3.50
2.19
3.49
0.51
Non-GAAP net income per ADS *
Basic
17.70
11.08
17.63
2.56
Diluted
17.51
10.95
17.46
2.53
* Each ADS represents five ordinary shares.
The accompanying notes are an integral part of this announcement.
Overlooked Analyst-Approved Dividend Plays You Can Count OnNetEase NASDAQ: NTES reported higher first-quarter revenue for 2026, driven by continued growth in its games business and stronger gross margins, while management highlighted momentum across major titles including Where Winds Meet, Marvel Rivals and the Fantasy Westward Journey franchise.
Total net revenue rose 6% year over year to RMB 30.6 billion, or $4.4 billion, Vice President of Finance Aileen Mo said on the company’s earnings call. Games and related value-added services generated RMB 25.7 billion in revenue, up 7% from a year earlier. Online game revenue totaled RMB 25.1 billion, increasing 18% quarter over quarter and 7% year over year, which Mo attributed to higher revenue from self-developed games including the Fantasy Westward Journey franchise and Where Winds Meet.
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Games Portfolio Drives First-Quarter Performance David Tepper Loads Up on China—These 5 Stocks Stand OutBill Pang, vice president of corporate development, speaking from prepared remarks on behalf of Chief Executive Officer William Ding, said 2026 was “off to a solid start,” with the quarter supported by both domestic and international game performance. Pang said NetEase’s established franchises sustained strong player activity in China, while overseas titles showed growing cross-market appeal.
Where Winds Meet, which launched overseas in November, was described by Pang as a “global phenomenon.” He said the title’s March expansion, Hexi, and a later version 1.6 update featuring the Qingchuan region helped sustain engagement. Pang said the update pushed the game to No. 2 on Steam’s global top seller chart and contributed to another quarterly revenue record for the title.
Cash Flow Focus: Thermo Fisher, Energy Transfer, and NetEaseManagement also pointed to continued momentum for Marvel Rivals. Pang said seasonal updates, new themed cosmetic content and the expansion of player-versus-environment features helped deepen engagement. He said an April content update that included outfits for Deadpool and Jeff the Landshark generated strong community engagement and drove the game to No. 2 on Steam’s U.S. top seller chart.
Other titles cited on the call included Knives Out, which reached No. 3 on Japan’s iOS top-grossing chart following a Tokyo Ghoul crossover, and Blood Strike, which recorded record-high daily active users during the second anniversary of its global mobile launch.
Domestic Franchises Remain a Focus In China, Pang said NetEase sustained engagement and revenue across established titles through content updates and gameplay innovation. The Fantasy Westward Journey franchise was a particular focus during the call. In response to an analyst question, management said Fantasy Westward Journey Online reached a new peak concurrent user record of 3.9 million in the first quarter, reflecting the impact of its unlimited server and continued growth in its time-based classic server.
Pang also highlighted long-running titles including Tianxia, which delivered a record commercial performance in the quarter, and Ghost Story Mobile, which recently marked its 10th anniversary and has attracted more than 200 million registered users since launch. Eggy Party topped China’s iOS grossing chart in February after Spring Festival events and collaborations with intellectual property including My Little Pony, Pang said.
Other titles discussed included Identity V, Infinite Borders, Naraka: Bladepoint and Sword of Justice. Pang said esports remains a core part of Identity V’s engagement strategy and noted that the Call of Duty: Mobile World Championship global finals were held in Shanghai earlier this month.
Pipeline Updates: Sea of Elements and Ananta Management said new games in development remain on track, including Sea of Elements and Ananta. During the question-and-answer session, management said the team behind Sea of Elements had received valuable player feedback from a recent technical test and was preparing for an upcoming “Dawnbreaker” test. The company said it is working toward a targeted third-quarter launch window.
On monetization, management said Sea of Elements would be designed around characters and cosmetic customization, with the goal of keeping the experience “rich but without too much burden.”
For Ananta, management said the game is being positioned as an urban open-world title rather than a traditional open-world role-playing game or anime-style action game. The company said its differentiation will center on letting players feel as if they are living in a modern virtual city, with activities such as shopping, social interaction, exploration and running businesses. Management said it would prioritize content quality over rushing to meet a specific launch window.
Margins Improve as Net Income Holds Steady NetEase’s overall gross profit margin increased to 69.4% from 64.1% a year earlier. The gross profit margin for games and related value-added services rose to 74.8% from 68.8%, which Mo said was primarily due to lower platform-related revenue-sharing costs.
Youdao revenue increased 4% year over year to RMB 1.3 billion, driven by online marketing services, though it declined 14% sequentially due to lower revenue from learning services and smart devices. NetEase Cloud Music revenue was RMB 2 billion, up 7% year over year and broadly stable sequentially. Revenue from innovative businesses and others fell 5% year over year to RMB 1.5 billion.
Total operating expenses were RMB 8.6 billion, equal to 28% of net revenue. Selling and marketing expenses rose to 11.2% of revenue from 9.4% a year earlier, primarily due to increased marketing expenses related to games and related value-added services. Research and development expenses were 14.7% of revenue, compared with 15.2% a year earlier.
Non-GAAP net income attributable to shareholders was RMB 11.3 billion, or $1.6 billion, which Mo said was broadly stable year over year. Non-GAAP basic earnings per ADS were $2.56, or $0.51 per share.
Cash Position and Capital Returns Mo said NetEase ended the quarter with a net cash position of RMB 167.5 billion as of March 31, 2026, up from RMB 153.5 billion at the end of 2025. The board approved a first-quarter dividend of $0.144 per share, according to Mo.
Under the company’s current $5 billion share repurchase program, NetEase had repurchased approximately 23.2 million ADS as of March 31 for a total cost of about $3.1 billion, Mo said.
Management also highlighted progress in overseas expansion. In response to a question from CICC, management said Where Winds Meet had maintained a 78% positive rating on Steam and repeatedly ranked among the top two on Steam’s global top seller chart during major updates. The company said it plans to continue expanding the game’s global potential through cross-device compatibility, stronger global publishing, additional platforms and deeper localization.
About NetEase NASDAQ: NTESNetEase, Inc NASDAQ: NTES is a Chinese technology company headquartered in Hangzhou that develops and operates Internet services and products. Founded in 1997 by William Ding (Ding Lei), the company has grown from an early web portal and e-mail provider into a diversified online services group. William Ding has served as the company's founder and long-time leader, guiding its expansion into games, digital content and consumer services.
The company's primary business is interactive entertainment: NetEase Games designs, develops and publishes PC and mobile games for domestic and international audiences, offering a mix of self-developed franchises and titles published under licensing and strategic partnerships.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
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NetEase is a cash-rich gaming compounder with solid fundamentals, shareholder-friendly management, and attractive headline valuation but faces a persistent China discount. Q1 results showed margin quality with 6.1% revenue growth and 14.8% gross profit growth, but EPS stagnation underscores the need for new titles to drive earnings. NTES remains heavily concentrated in gaming (81.9% of FY25 revenue), with limited diversification and ongoing China policy risks impacting valuation multiples.
$10,000 dropped into the iShares Asia 50 ETF (NYSEARCA:AIA) on the last trading day of 2025 was worth roughly $15,267 by the close on June 3, 2026. That is the kind of half-year a US large-cap investor doesn’t get out of the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) in a calendar year, let alone five months. AIA is up 52.67% year to date through June 3, while SPY is up 10.61% over the same window. The headline writes itself. The mechanism, which is what you actually need, is more interesting and a little narrower than the headline implies.
The Arithmetic, Stripped Down AIA opened the year at $97.51 and closed June 3 at $148.87. The one-year number is even larger, with the fund up 100.7% from June 2025, when shares traded near $74.18. SPY’s twelve-month return over that same window is 26.53%. The gap is not a rounding error. It is the widest stretch of Asia mega-cap outperformance versus the S&P 500 in a decade.
One number flips the framing. AIA’s five-year return is 79.67%. SPY’s, over the identical five-year window, is 78.48%. AIA spent most of 2021 through late 2025 going sideways or worse while the S&P compounded. The 2026 surge is largely the long delayed catch-up of a single sector inside this fund finally getting paid.
What Did the Work AIA is marketed as the 50 largest companies across developed and emerging Asia. In practice, as of the March 31, 2026 N-PORT filing, it is a concentrated semiconductor bet wearing a diversified suit. Taiwan Semiconductor Manufacturing (NYSE:TSM | TSM Price Prediction) alone was 22.42% of net assets. Samsung Electronics added another 12.69% in common shares (and roughly 14.12% counting preferreds), and SK hynix brought in 4.15%. The three combined ran 39.26% of the fund, with broader semiconductor and electronics exposure (MediaTek, Hon Hai, Delta, UMC, ASE) pushing the cluster past 45%.
TSM did exactly what a 22%-weighted top holding has to do to power a 52% fund return. The stock is up 44.1% year to date and 123.65% over twelve months. Q2 2026 revenue reached NT$1.13 trillion, with net income up 43.82% year over year and gross profit up 37.26%. Management cited "surging demand for advanced AI and high-performance computing chips" and authorized $31.28 billion in new capex plus a $20 billion equity injection into TSMC Arizona. At a forward P/E of 28 on a market cap of roughly $2.32 trillion, TSM now trades as critical AI infrastructure rather than a cyclical foundry.
The China Internet Story Was a Drag If you assumed the AIA rally was a China tech recovery, the underlying data argues otherwise. Alibaba (NYSE:BABA), AIA’s fourth-largest holding at 4.38%, is down 13.21% year to date. NetEase (NASDAQ:NTES), a smaller position at roughly 0.98%, is down 10.02%. Tencent, the third-largest holding at 7.13%, did its share, but the China internet basket as a whole has been a drag on the fund this year, not the engine.
Alibaba’s Q4 fiscal 2026 captured why. Revenue grew just 3% to $35.28 billion and the company posted a $123 million operating loss as adjusted EBITA collapsed 84% on aggressive cloud and quick-commerce spending. Cloud Intelligence Group revenue did accelerate 40%, with CEO Eddie Wu noting "Alibaba’s full-stack AI investments have progressed from incubation to commercialization at scale." The market is still digesting whether to reward that pivot or punish the margin compression.
The other ballast was financials. HSBC Holdings is up 23.15% year to date and 65.64% over twelve months, riding banking NII guidance raised to roughly $46 billion despite a brutal Q1 ECL print. HSBC isn’t an AIA holding directly, but AIA’s roughly 12% combined weight to Asian banks, insurers, and exchanges (DBS, OCBC, UOB, AIA Group itself, ICBC, CCB) caught the same regional re-rating that lifted HSBC.
The Numbers Side By Side Holding / Benchmark YTD 2026 Return Role in AIA AIA (the fund) 52.67% Subject SPY (benchmark) 10.61% Reference TSM 44.1% 22.42% top holding BABA -13.21% 4.38% holding (drag) NTES -10.02% ~1% holding (drag) HSBC 23.15% Sector proxy The Retail Tell The crowd noticed TSM before they noticed AIA. A viral wallstreetbets post titled "TSMC is the Hormuz Strait of semiconductors. I moved 30% of my portfolio over today" hit 507 upvotes over Memorial Day weekend, with sentiment scoring very bullish (80+) through six consecutive measurement windows on May 29-30. The framing tells you what kind of trade this has become. Retail is treating TSM as critical infrastructure. That is also how it has been priced.
What Has To Hold For The Run To Continue The forward question is simple and the answer is not. AIA’s 2026 is a leveraged bet on three things continuing in roughly their current shape. First, AI capex must keep its current cadence, because TSM, Samsung, SK hynix, and the Taiwanese supply chain that surrounds them are doing one thing right now, which is selling leading-edge silicon into hyperscaler buildouts. TSM’s $31.28 billion capex authorization is a vote of management confidence. It is also a forward bet that needs the demand curve to keep cooperating.
Second, Taiwan Strait geopolitical risk has to stay theoretical. With roughly 27% of AIA in Taiwan-domiciled companies and about 20% in South Korea, this fund is closer to a single-region tech bet than its "Asia 50" label suggests.
Third, the China internet basket cannot get worse. It is already a drag, with BABA down 13% and NTES down 10% year to date despite a 52% fund-level return. If China tech stays flat from here while semiconductors continue running, AIA keeps working. If China tech rolls over while AI capex normalizes, the fund’s concentration becomes its problem.
Goldman Sachs Asset Management framed the China piece honestly in its 2026 outlook, noting that recent support for China equities stems from "abundant liquidity, increasing retail participation, and limited alternative investment options" and that long-term outperformance "hinges on translating this liquidity into durable earnings growth." The translation has not happened yet inside AIA’s China sleeve. The fund is up 52% despite that China sleeve, with the gains coming from elsewhere.
The thing to actually watch is TSM’s next earnings print and the direction of hyperscaler capex commentary out of US mega-caps. AIA now functions as a leveraged TSM trade with a Samsung kicker, a Tencent sidecar, and a China internet weight that has been actively working against shareholders rather than as a diversified pan-Asia index. If that arrangement keeps working, the run continues. If TSM gives back the AI premium, AIA gives back the year. The 52% return tells you what happened. The 22.42% top weight tells you what to watch next.
$10,000 dropped into the iShares Asia 50 ETF (NYSEARCA:AIA) on the last trading day of 2025 was worth roughly $15,267 by the close on June 3, 2026. That is the kind of half-year a US large-cap investor doesn’t get out of the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) in a calendar year, let alone five months. AIA is up 52.67% year to date through June 3, while SPY is up 10.61% over the same window. The headline writes itself. The mechanism, which is what you actually need, is more interesting and a little narrower than the headline implies.
The Arithmetic, Stripped Down AIA opened the year at $97.51 and closed June 3 at $148.87. The one-year number is even larger, with the fund up 100.7% from June 2025, when shares traded near $74.18. SPY’s twelve-month return over that same window is 26.53%. The gap is not a rounding error. It is the widest stretch of Asia mega-cap outperformance versus the S&P 500 in a decade.
One number flips the framing. AIA’s five-year return is 79.67%. SPY’s, over the identical five-year window, is 78.48%. AIA spent most of 2021 through late 2025 going sideways or worse while the S&P compounded. The 2026 surge is largely the long delayed catch-up of a single sector inside this fund finally getting paid.
What Did the Work AIA is marketed as the 50 largest companies across developed and emerging Asia. In practice, as of the March 31, 2026 N-PORT filing, it is a concentrated semiconductor bet wearing a diversified suit. Taiwan Semiconductor Manufacturing (NYSE:TSM | TSM Price Prediction) alone was 22.42% of net assets. Samsung Electronics added another 12.69% in common shares (and roughly 14.12% counting preferreds), and SK hynix brought in 4.15%. The three combined ran 39.26% of the fund, with broader semiconductor and electronics exposure (MediaTek, Hon Hai, Delta, UMC, ASE) pushing the cluster past 45%.
TSM did exactly what a 22%-weighted top holding has to do to power a 52% fund return. The stock is up 44.1% year to date and 123.65% over twelve months. Q2 2026 revenue reached NT$1.13 trillion, with net income up 43.82% year over year and gross profit up 37.26%. Management cited "surging demand for advanced AI and high-performance computing chips" and authorized $31.28 billion in new capex plus a $20 billion equity injection into TSMC Arizona. At a forward P/E of 28 on a market cap of roughly $2.32 trillion, TSM now trades as critical AI infrastructure rather than a cyclical foundry.
The China Internet Story Was a Drag If you assumed the AIA rally was a China tech recovery, the underlying data argues otherwise. Alibaba (NYSE:BABA), AIA’s fourth-largest holding at 4.38%, is down 13.21% year to date. NetEase (NASDAQ:NTES), a smaller position at roughly 0.98%, is down 10.02%. Tencent, the third-largest holding at 7.13%, did its share, but the China internet basket as a whole has been a drag on the fund this year, not the engine.
Alibaba’s Q4 fiscal 2026 captured why. Revenue grew just 3% to $35.28 billion and the company posted a $123 million operating loss as adjusted EBITA collapsed 84% on aggressive cloud and quick-commerce spending. Cloud Intelligence Group revenue did accelerate 40%, with CEO Eddie Wu noting "Alibaba’s full-stack AI investments have progressed from incubation to commercialization at scale." The market is still digesting whether to reward that pivot or punish the margin compression.
The other ballast was financials. HSBC Holdings is up 23.15% year to date and 65.64% over twelve months, riding banking NII guidance raised to roughly $46 billion despite a brutal Q1 ECL print. HSBC isn’t an AIA holding directly, but AIA’s roughly 12% combined weight to Asian banks, insurers, and exchanges (DBS, OCBC, UOB, AIA Group itself, ICBC, CCB) caught the same regional re-rating that lifted HSBC.
The Numbers Side By Side Holding / Benchmark YTD 2026 Return Role in AIA AIA (the fund) 52.67% Subject SPY (benchmark) 10.61% Reference TSM 44.1% 22.42% top holding BABA -13.21% 4.38% holding (drag) NTES -10.02% ~1% holding (drag) HSBC 23.15% Sector proxy The Retail Tell The crowd noticed TSM before they noticed AIA. A viral wallstreetbets post titled "TSMC is the Hormuz Strait of semiconductors. I moved 30% of my portfolio over today" hit 507 upvotes over Memorial Day weekend, with sentiment scoring very bullish (80+) through six consecutive measurement windows on May 29-30. The framing tells you what kind of trade this has become. Retail is treating TSM as critical infrastructure. That is also how it has been priced.
What Has To Hold For The Run To Continue The forward question is simple and the answer is not. AIA’s 2026 is a leveraged bet on three things continuing in roughly their current shape. First, AI capex must keep its current cadence, because TSM, Samsung, SK hynix, and the Taiwanese supply chain that surrounds them are doing one thing right now, which is selling leading-edge silicon into hyperscaler buildouts. TSM’s $31.28 billion capex authorization is a vote of management confidence. It is also a forward bet that needs the demand curve to keep cooperating.
Second, Taiwan Strait geopolitical risk has to stay theoretical. With roughly 27% of AIA in Taiwan-domiciled companies and about 20% in South Korea, this fund is closer to a single-region tech bet than its "Asia 50" label suggests.
Third, the China internet basket cannot get worse. It is already a drag, with BABA down 13% and NTES down 10% year to date despite a 52% fund-level return. If China tech stays flat from here while semiconductors continue running, AIA keeps working. If China tech rolls over while AI capex normalizes, the fund’s concentration becomes its problem.
Goldman Sachs Asset Management framed the China piece honestly in its 2026 outlook, noting that recent support for China equities stems from "abundant liquidity, increasing retail participation, and limited alternative investment options" and that long-term outperformance "hinges on translating this liquidity into durable earnings growth." The translation has not happened yet inside AIA’s China sleeve. The fund is up 52% despite that China sleeve, with the gains coming from elsewhere.
The thing to actually watch is TSM’s next earnings print and the direction of hyperscaler capex commentary out of US mega-caps. AIA now functions as a leveraged TSM trade with a Samsung kicker, a Tencent sidecar, and a China internet weight that has been actively working against shareholders rather than as a diversified pan-Asia index. If that arrangement keeps working, the run continues. If TSM gives back the AI premium, AIA gives back the year. The 52% return tells you what happened. The 22.42% top weight tells you what to watch next.
The ticker investors used to know as VanEck Gaming ETF (NASDAQ:BJK) officially converted to the VanEck Digital Native Economy ETF on April 9, 2026, trading under the new symbol GENZ. The fund still sits in many income-oriented portfolios because of its $1.36 annual distribution paid in February 2026, which works out to a trailing yield in the high 3% range on today’s $34.75 share price. The question for anyone holding BJK/GENZ for income is whether that payout survives a portfolio that has been gutted of casino operators and rebuilt around Gen Z spending habits.
From casino floors to gig apps and payments rails The mechanics have changed materially. BJK used to draw most of its distribution from cash-rich land-based casino operators and gaming REITs. The reconstituted fund now tracks the MarketVector Digital Native Economy Index, targeting payments, gig platforms, online betting, millennial finance, and digital sports betting/iGaming. The portfolio holds 36 names, with the top 10 representing roughly 63% of assets, and the largest positions read very differently than the old roster: Uber at about 8%, NetEase at 8.7%, Charles Schwab at 7.8%, and Electronic Arts at 7.6%.
That shift matters because dividend safety in an equity ETF is just the weighted dividend safety of its largest holdings. The expense ratio is 0.51%, and total net assets sit at a slim $16.7 million, which raises a separate concern about fund viability that income investors should not ignore.
Where the dividend dollars actually come from Look closely at the top of the book and you find a barbell that is not built for income. Uber Technologies (NYSE:UBER | UBER Price Prediction), the largest holding, does not pay a recurring cash dividend at all, and its first capital return came through buybacks rather than a stable distribution. Electronic Arts (NASDAQ:EA) pays a token yield well under 1%, prioritizing share repurchases. Together those two names alone account for roughly 15% of the fund and contribute almost nothing to the distribution.
The real dividend support comes from a narrower slice. Charles Schwab (NYSE:SCHW) carries a payout ratio in the mid-30s with strong earnings coverage, and NetEase (NASDAQ:NTES) has run a generous variable payout funded by net cash and steady gaming free cash flow. Both look durable on their own. The problem is concentration: a handful of payers are doing the heavy lifting while the index methodology keeps pulling weight toward growth-tilted digital platforms that return capital through buybacks rather than dividends. The mechanical result is a distribution that should drift lower over the next one to two annual cycles as the legacy gaming names roll out.
Total return swamps the yield story The price chart tells the rest of the story. GENZ is down -8.9% year to date, off 9% over the past year, and down 26% across five years. A 3.8% trailing yield does not compensate for that. NAV erosion has been eating the income story alive through the rebrand. Layer in legislative risk from the Senate’s 2025 “phantom winnings” tax proposal limiting gambling loss deductions to 90%, and the iGaming sleeve of the portfolio carries genuine regulatory tail risk.
The verdict on the distribution The annual payout is not in immediate jeopardy, because the dividend-paying holdings inside GENZ are financially healthy. But the income profile that drew investors to BJK is unwinding by design. Expect a smaller, lumpier, less predictable distribution as the index leans further into non-dividend-paying digital platforms. Income-first investors looking for sector exposure may find better fits in a dedicated dividend ETF. GENZ now fits as a thematic growth bet on digital-native consumer behavior for investors who do not need the income.
Shares of NetEase (NTES - Free Report) have gained 2.1% over the past four weeks to close the last trading session at $118.7, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $159.84 indicates a potential upside of 34.7%.
The mean estimate comprises 19 short-term price targets with a standard deviation of $13.89. While the lowest estimate of $132.00 indicates an 11.2% increase from the current price level, the most optimistic analyst expects the stock to surge 55.9% to reach $185.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.
However, an impressive consensus price target is not the only factor that indicates a potential upside in NTES. This view is strengthened by the agreement among analysts that the company will report better earnings than what they estimated earlier. Though a positive trend in earnings estimate revisions doesn't give any idea as to how much the stock could surge, it has proven effective in predicting an upside.
Price, Consensus and EPS Surprise
Here's What You May Not Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Here's Why There Could be Plenty of Upside Left in NTESThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
The Zacks Consensus Estimate for the current year has increased 7.3% over the past month, as four estimates have gone higher while one has gone lower.
Moreover, NTES currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Therefore, while the consensus price target may not be a reliable indicator of how much NTES could gain, the direction of price movement it implies does appear to be a good guide.
NetEase (NTES - Free Report) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.
The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.
The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time.
As such, the Zacks rating upgrade for NetEase is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
For NetEase, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate RevisionsEmpirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for NetEaseFor the fiscal year ending December 2026, this internet technology company is expected to earn $9.46 per share, which is unchanged compared with the year-ago reported number.
Analysts have been steadily raising their estimates for NetEase. Over the past three months, the Zacks Consensus Estimate for the company has increased 7.3%.
Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of NetEase to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
On June 10, 2026, we present a DCF analysis for NetEase Inc NTES , which has experienced a mixed price performance recently. Over the past week, the stock has decreased by 2.6%, while it has gained 4.8% in the last month. However, year-to-date, NTES is down 10.9%, and it has declined 5.0% over the past year.
DCF Earnings-based intrinsic value of $189.60 compared to the current price of $120.73, indicating a margin of safety of 36.3%. DCF Free Cash Flow (FCF)-based intrinsic value of $335.46, providing a second opinion on valuation. GF Score™ of 92/100, suggesting high reliability of the DCF inputs. What Is NTES Worth? DCF Earnings-Based Model The DCF earnings-based model for NetEase Inc NTES utilizes a two-stage growth approach. In the first stage, we project earnings growth for the next ten years, followed by a terminal growth phase. The assumptions used in this model are outlined in the table below:
Parameter Value Current EPS (TTM, excl. non-recurring) $7.93 10-Year Growth Rate 16.0% 10-Year Treasury Rate 4.53% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In the first stage (Years 1-10), we assume that EPS will grow at a rate of 16.0% per year, discounted at a rate of 11%. The calculated value for this growth stage is $101.92 per share. In the second stage (Years 11-20), we assume a terminal growth rate of 4%, also discounted at 11%, yielding a terminal stage value of $87.68 per share. The summary of the calculations is presented in the table below:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 16.0%, discounted at 11% $101.92 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $87.68 Intrinsic Value Growth + Terminal $189.60 With a current price of $120.73 compared to the intrinsic value of $189.60, NTES appears significantly undervalued, reflecting a margin of safety of 36.3%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research indicates that stock prices correlate more closely with earnings than with free cash flow. For further details, you can access the NTES DCF Calculator.
What Does the Free Cash Flow DCF Say? In addition to the earnings-based DCF model, we also consider the Free Cash Flow (FCF)-based intrinsic value, which is calculated at $335.46. This value provides a second perspective on the company's valuation. When comparing the FCF-based intrinsic value with the earnings-based intrinsic value, both models indicate that NTES is significantly undervalued, with a margin of safety of 64.0%.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for NetEase Inc is calculated at $119.42, suggesting that the stock is 1.1% overvalued based on this third valuation perspective. GF Value™ is GuruFocus' proprietary measure, derived from historical trading multiples, past business growth, and future performance estimates. While the DCF models indicate that NTES is undervalued, the GF Value™ presents a slightly different view, suggesting a need for caution. For more information, visit the GF Value™ page.
What Does NTES's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been shown to generate higher long-term returns based on backtested data from 2006 to 2021. The GF Score™ for NTES is 92/100, indicating strong fundamentals. Below is a summary of the GF Score™ metrics:
Metric Rating GF Score™ 92/100 Financial Strength 7/10 Profitability 10/10 Growth 9/10 Valuation 9/10 Momentum 4/10 With a predictability rank of 1/5 stars, it is important to note that higher predictability ratings typically indicate that the DCF model is more reliable for this stock. For additional insights, visit the NTES stock page.
Key Assumptions and Limitations It is essential to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with low predictability ratings, such as NTES, tend to produce less reliable DCF estimates. Additionally, the terminal growth rate of 4% is a simplifying assumption that may not accurately reflect future conditions.
What This Means for Investors In synthesizing the three valuation models—DCF earnings, DCF FCF, and GF Value™—we find that while the DCF earnings and FCF models indicate that NTES is significantly undervalued, the GF Value™ suggests a slight overvaluation. Overall, the consensus points towards NTES being undervalued. For the full DCF analysis, visit the NTES DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is NTES's intrinsic value based on DCF?
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
The fund formerly known as the VanEck Gaming ETF (NYSEARCA:BJK) has changed character in a way income holders need to understand. Effective April 9, 2026, VanEck converted BJK into the VanEck Digital Native Economy ETF (GENZ), swapping a casino-and-gaming portfolio for a digital-platform thematic. That matters for anyone holding the fund for income: the prior trailing yield sat in the high-3% range, and the new holdings prioritize growth. The honest assessment is that BJK was never a pure income vehicle, and after the rebrand it is even less of one.
How the fund actually generates income BJK’s distributions came from dividends paid by its underlying holdings rather than from options premiums or bond coupons. The legacy index leaned on casino operators and gaming REITs like VICI Properties and Gaming and Leisure Properties, which carried the income load. The interactive entertainment names provided growth while contributing little yield. The post-rebrand portfolio tracks the MarketVector Digital Native Economy Index, with an expense ratio of 0.50%, and its top holdings include Uber and other platform companies that pay no dividend at all.
Why the income load now falls on a handful of payers Electronic Arts (NASDAQ:EA | EA Price Prediction) pays $0.19 quarterly, flat for 16 consecutive quarters since mid-2022. Coverage looks healthy: FY26 operating cash flow was $2.55 billion against just $191 million in dividends, with $1.06 billion returned through buybacks. EA clearly favors repurchases over dividend growth, which means BJK holders should not expect rising payouts from this name.
NetEase (NASDAQ:NTES) is the more meaningful income contributor, but the cadence is lumpy. The Q1 2026 distribution was $1.16 per ADS, versus $0.72 most recently, reflecting a policy tied to roughly 20-30% of net income. EPS of $7.82 and a 22% return on equity support continued payments, but quarter-to-quarter variability is the norm.
Charles Schwab (NYSE:SCHW), an unconventional inclusion tied to online brokerage exposure, is the cleanest dividend story in the basket. Schwab raised its quarterly payout to $0.32 in early 2026 from $0.27, supported by $5.03 in trailing EPS and a 19% return on equity. That is a growing dividend with real coverage, but it is one stock inside a 25-plus holding portfolio.
The growth names dilute the yield by design Take-Two Interactive and Roblox pay nothing. TTWO’s last dividend was a token $0.0001 in 2008, and RBLX has never paid one. Both prioritize content investment, with TTWO’s GTA VI launch tied to the FY27 outlook of $7.9-8.1 billion in revenue. These positions are in BJK for upside.
Total return is the only honest scorecard A 3% yield means nothing if NAV is shrinking. BJK trades near $35, down 13% year-to-date, down roughly 10% over one year, and down 30% over five years. University of Michigan consumer sentiment fell to 49.8 in April, recessionary territory, which adds cyclical pressure to discretionary entertainment names. The ten-year return is positive at roughly 35%, but that long arc was built on the prior gaming-and-casino composition that no longer exists.
The verdict BJK, now GENZ, is a thematic growth vehicle that happens to pay a distribution. Income is at best a secondary reason to own this fund. As John Seetoo wrote at 24/7 Wall St., the rebrand leaves "a few companies to bear the income load", and that concentration risk is real. Holders who bought BJK for yield should reset expectations: the distribution will likely shrink as the portfolio rotates further toward non-payers. Investors wanting durable equity income from gaming-adjacent exposure are better served looking at the underlying dividend growers directly, or at gaming REIT-heavy strategies that the prior BJK index used to capture.
NetEase (NTES - Free Report) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this internet technology company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for NetEase, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate RevisionsThe company is expected to earn $2.35 per share for the current quarter, which represents a year-over-year change of +13.5%.
Over the last 30 days, two estimates have moved higher for NetEase compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 12.53%.
Current-Year Estimate RevisionsFor the full year, the company is expected to earn $9.46 per share, representing a year-over-year change of +14.1%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for NetEase. Over the past month, four estimates have moved higher compared to one negative revision, helping the consensus estimate increase 7.32%.
Favorable Zacks RankThe promising estimate revisions have helped NetEase earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom LineWhile strong estimate revisions for NetEase have attracted decent investments and pushed the stock 8% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
JD.com, Inc. (JD - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
Shares of this company have returned +1.3% over the past month versus the Zacks S&P 500 composite's +5.6% change. The Zacks Internet - Commerce industry, to which JD.com belongs, has gained 2.8% over this period. Now the key question is: Where could the stock be headed in the near term?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Revisions to Earnings EstimatesRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, JD.com is expected to post earnings of $0.92 per share, indicating a change of +33.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
For the current fiscal year, the consensus earnings estimate of $3.13 points to a change of +22.8% from the prior year. Over the last 30 days, this estimate has remained unchanged.
For the next fiscal year, the consensus earnings estimate of $3.57 indicates a change of +14.2% from what JD.com is expected to report a year ago. Over the past month, the estimate has changed -0.5%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, JD.com is rated Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth ForecastEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
For JD.com, the consensus sales estimate for the current quarter of $52.83 billion indicates a year-over-year change of +6.1%. For the current and next fiscal years, $204.15 billion and $215.2 billion estimates indicate +11.2% and +5.4% changes, respectively.
Last Reported Results and Surprise HistoryJD.com reported revenues of $45.77 billion in the last reported quarter, representing a year-over-year change of +10.3%. EPS of $0.74 for the same period compares with $1.16 a year ago.
Compared to the Zacks Consensus Estimate of $45.57 billion, the reported revenues represent a surprise of +0.42%. The EPS surprise was +29.82%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.
ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
JD.com is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about JD.com. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
The AI boom has turned semiconductors into geopolitical bargaining chips. One minute, Washington is tightening export controls. The next, trade delegations are back in Beijing trying to reopen markets worth tens of billions of dollars. For investors, the bigger question is simple: Which company actually benefits when the political theater ends?
President Donald Trump’s recent China trip appeared, at first glance, to hand Nvidia (NASDAQ:NVDA | NVDA Price Prediction) a major victory. But surprisingly, the headlines may have obscured the more important development — Beijing seems far more interested in deepening ties with Advanced Micro Devices (NASDAQ:AMD) instead.
Trump Helped Nvidia Reopen the Door to China Trump traveled to China with a delegation of U.S. executives as part of a broader push to revive business ties between the world’s two largest economies. At the conclusion of the visit, multiple agreements were announced, including a deal allowing Nvidia to sell its H200 AI chips to 10 Chinese companies.
Among the reported buyers were Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), ByteDance, and Lenovo — all major players in China’s cloud computing and AI infrastructure markets.
That mattered because China was once one of Nvidia’s most important growth markets. China previously accounted for roughly 20% to 25% of data center-related sales before export restrictions imposed under both the Biden and Trump administrations narrowed access to advanced AI chips.
The H200 agreement briefly suggested Nvidia might regain part of that lost business. And given Nvidia’s dominance in AI accelerators, it made sense why the announcement dominated headlines. After all, Nvidia still controls an estimated 80% to 90% share of the AI GPU market.
China Appears to Be Cooling on Nvidia That said, Beijing’s response afterward told a different story. Reports indicate Chinese regulators quickly moved to place Nvidia’s GPUs under tighter government scrutiny, raising questions about how much practical market access the company will actually regain. China has increasingly emphasized reducing reliance on U.S. technology suppliers, particularly in areas tied to AI and national security.
In any case, Nvidia’s position in China remains politically fragile. The company’s premium AI chips sit directly at the center of the U.S.-China technology conflict. That creates a problem for investors. Nvidia may win approvals one month and face restrictions the next.
AMD, meanwhile, appears to be navigating the environment differently. Reports say AMD CEO Lisa Su met with China’s vice premier He Lifeng in Beijing on Monday at his request. The Chinese official reportedly invited AMD to deepen cooperation as trade relations stabilize. The tone matters because it signals Beijing may view AMD as a more workable long-term partner.
AMD Could Be the More Interesting China AI Play Let’s look at what the numbers tell us.
Company Forward P/E Ratio 2026 Revenue Growth Estimate AI GPU Market Position Nvidia Around 19 73% Dominant leader Advanced Micro Devices Around 31 42% Fast-growing challenger Granted, Nvidia remains the AI kingpin. Its CUDA software ecosystem, Blackwell architecture, and hyperscaler relationships still give it a lead competitors have not closed. But AMD does not need to beat Nvidia outright to reward shareholders.
AMD’s MI300 accelerator family has already gained traction with hyperscalers and enterprise customers. If China begins steering more AI demand toward AMD chips while limiting Nvidia’s influence, AMD gains access to incremental revenue streams investors may not fully appreciate yet.
Surprisingly, AMD may also carry lower geopolitical baggage in Beijing’s eyes because it has historically held a smaller share of China’s AI infrastructure market. Nvidia became too dominant — and therefore too strategically sensitive.
Regardless, China reopening even part of its AI chip market creates opportunity. The question is who captures more of it.
Key Takeaway In short, Trump’s China trip may have generated splashy headlines for Nvidia, but the more actionable signal for sharp investors could be AMD’s warming relationship with Beijing.
Nvidia still owns the strongest AI franchise in semiconductors. Its revenue reached $215.9 billion over the past fiscal year while free cash flow topped $96 billion. Those numbers are hard to ignore.
Yet AMD may offer investors something Nvidia currently cannot — a cleaner path into a reopened China market. For savvy investors looking beyond the obvious headline, that distinction could matter a lot over the next 12 to 24 months.
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about JD.com, Inc. (JD - Free Report) .
JD.com currently has an average brokerage recommendation (ABR) of 1.36, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 24 brokerage firms. An ABR of 1.36 approximates between Strong Buy and Buy.
Of the 24 recommendations that derive the current ABR, 19 are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 79.2% and 8.3% of all recommendations.
Brokerage Recommendation Trends for JD
Check price target & stock forecast for JD.com here>>>
The ABR suggests buying JD.com, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.
Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.
Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.
In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Should You Invest in JD?Looking at the earnings estimate revisions for JD.com, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $3.13.
Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for JD.com. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for JDcom.
