NetEase Inc. Invests $35.65 Billion in Youdao, Inc. Unsponsored ADR $DAO

Key Points

• NetEase acquired 2.9 million Youdao shares worth approximately $35.65 billion, representing about 2.41% of Youdao and 4.7% of NetEase’s investment portfolio.
• Youdao reported quarterly EPS of $0.11, beating the $0.02 consensus estimate, but revenue of $215.91 million fell short of analysts’ $229.02 million forecast.
• Youdao shares opened at $18.30, near their 52-week high of $18.94. Analyst sentiment remains mixed, with one Buy and one Sell rating producing a consensus “Hold.”

NetEase Inc. bought a new stake in Youdao, Inc. Unsponsored ADR (NYSE:DAO - Free Report) during the second quarter, according to its most recent disclosure with the SEC. The institutional investor bought 2,898,293 shares of the company's stock, valued at approximately $35,649,004,000. Youdao accounts for about 4.7% of NetEase Inc.'s investment portfolio, making the stock its 2nd biggest holding. NetEase Inc. owned approximately 2.41% of Youdao as of its most recent SEC filing.

Separately, Public Employees Retirement System of Ohio grew its stake in Youdao by 35.9% in the 3rd quarter. Public Employees Retirement System of Ohio now owns 29,286 shares of the company's stock valued at $291,000 after buying an additional 7,729 shares during the last quarter. Institutional investors own 21.91% of the company's stock.

Youdao Trading Down 0.2%

Shares of NYSE DAO opened at $18.30 on Monday. The firm's 50-day moving average price is $14.65 and its 200-day moving average price is $12.09. Youdao, Inc. Unsponsored ADR has a 1-year low of $8.30 and a 1-year high of $18.94. The firm has a market capitalization of $2.20 billion, a P/E ratio of 91.50 and a beta of 0.59.

Youdao (NYSE:DAO - Get Free Report) last issued its earnings results on Thursday, August 20th. The company reported $0.11 earnings per share for the quarter, topping analysts' consensus estimates of $0.02 by $0.09. Youdao had a negative return on equity of 8.46% and a net margin of 2.71%.The company had revenue of $215.91 million for the quarter, compared to analyst estimates of $229.02 million.

Analysts Set New Price Targets

A number of equities research analysts recently issued reports on the company. Weiss Ratings raised Youdao from a "sell (d)" rating to a "sell (d+)" rating in a research report on Friday, July 17th. Wall Street Zen upgraded Youdao from a "hold" rating to a "buy" rating in a research report on Saturday. One investment analyst has rated the stock with a Buy rating and one has assigned a Sell rating to the company. According to data from MarketBeat, Youdao has a consensus rating of "Hold".

Youdao Company Profile

Youdao, Inc NYSE: DAO, established in 2006 as a subsidiary of NetEase, is headquartered in Beijing, China. The company went public on the New York Stock Exchange in October 2019, marking a significant milestone in its development as an intelligent learning and knowledge service provider. Since its inception, Youdao has combined cloud computing, artificial intelligence and big data analytics to create an adaptive learning ecosystem designed to meet the needs of individual learners and organizations.

At the core of Youdao's offerings is its suite of digital dictionaries and translation tools, including the flagship Youdao Dictionary app and translation engine.

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