Why Did NetEase Plunge 10.78%? Trade War Tensions Spark Sell-Off

On April 7, 2025, NetEase, Inc. (NTES) experienced a significant drop of 10.78% in pre-market trading, reflecting a notable decline in investor sentiment.

One of the key factors contributing to the decline in NTES stock is the escalating trade war tensions. The recent imposition of retaliatory tariffs by China has led to a broader sell-off in the market, with many Chinese stocks, including NTES, experiencing substantial losses. This geopolitical uncertainty has raised concerns about the potential impact on NetEase's business operations and financial performance.

Additionally, the short interest in NTES has shown a decline, with 3,490,000 shares being shorted as of February 15th, down from 4,230,000 shares on January 31st. This reduction in short interest suggests that some investors may be taking a more cautious approach to the stock, potentially contributing to the recent price decline.

Despite the recent downturn, NetEase has received a positive upgrade from Zacks, which has assigned the stock a Zacks Rank #1 (Strong Buy). This upgrade reflects growing optimism about the company's earnings prospects, which could potentially drive the stock higher in the future. However, the current market conditions and geopolitical risks may continue to weigh on the stock in the near term.