3 Red Flags for NetEase's Future

NetEase's (NASDAQ: NTES) stock price slipped about 15% this year as investors fretted over the slowing growth of its gaming business and regulatory challenges in China. Rising interest rates, which drove investors away from higher-growth tech stocks, exacerbated that pain.

Some investors might be tempted to nibble on NetEase at these levels since it looks reasonably valued at 20 times forward earnings, and its core businesses are well insulated from inflationary and supply chain headwinds. Unfortunately, three red flags suggest it's still too early to turn bullish.

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Source Fool.com