Shares of NetEase (NASDAQ:NTES) fell more than 8% in Hong Kong on Tuesday after JPMorgan said the debut performance of the company’s latest game fell short of expectations.
The stock recovered some losses afterward, closing 6.8% lower. US-listed shares fell 1.8% in premarket trading.
Analysts at JPMorgan said NetEase’s new game, Condor Heroes, currently ranks 21st in China's iOS store for top-grossing games, a stark contrast to the anticipated top-five position.
Feedback from some players criticizing the game's combat mechanics and graphic quality has been noted.
Analysts also pointed out that recent declines in NetEase's share price reflect the market's uncertainty about its game performance in the first and second quarters.
Meanwhile, Morgan Stanley analysts lowered their NetEase’s game revenue growth expectations for 2023-2025 to a 10% compound annual growth rate (CAGR) from the previously estimated 14%, “mainly due to Condor Heroes' miss and FWJ PC's monetization adjustment.”
“It is one of NetEase's top three open-world MMORPG IPs in recent years, along with Justice Mobile and Where Winds Meet, yet, it was not developed by NetEase's first-class studios, hence, we think the disappointment is one-off,” analysts led by Alex Poon said.
“We lower our first-year grossing expectation to Rmb1-2bn from Rmb4bn given its iOS grossing ranking of #29 on April 1,” they added.