According to Morgan Stanley, a survey of senior players (over 20 years of experience) found that Netease (09999.HK) (NTES.US) made a system adjustment to the PC version of "Journey to the West" on the 21st of last month, which caused the game to spiral into negativity and led to the devaluation of its virtual currency.

The report attributed the devaluation of virtual currency to the closure of the system to restrict trade of high-value gaming items, resulting in reduced market liquidity within the game and causing many studios and merchants to exit the game, further damaging the emotions of loyal players. Since a significant portion of players earn income from the game, the value of virtual currency reflects the health of the game's ecosystem. The adjustment resulted in a decline in all four types of income, including the closure of the "Journey to the West" pocket version to reduce project supply and sales; the commission received from the game's market was affected; consumption of game time was reduced; and clothing trades within the game were affected.

Based on limited tracking data, the bank does not expect the market consensus to reflect the event until second-quarter results are announced in August. The bank currently assumes that the stock's earnings will be flat year-on-year, and its current P/E ratio of 13.5 is not attractive enough. Therefore, the bank maintains a "neutral" rating, with a target price of $100 for U.S. depositary receipts.