Young people are ultimately young people. Why are Sohu and NetEase so vastly different?

A $600 million market cap compared to $60 billion reveals a huge gap, hiding the divergence of the internet generation. Sohu and NetEase, once the two giants among the portal trio, now follow completely different market trajectories. Young people’s consumption choices are silently rewriting the landscape of the internet.

Behind the Market Cap Gap: Young People’s Choices Are Changing the Internet Landscape

When opening stock apps to check numbers, many veteran investors are shocked—this former internet newcomer’s total market value has shrunk to just $600 million. Ironically, Sohu still holds $1.2 billion in cash, deposits, and investment reserves. A simple analogy: someone carrying $120 in cash is valued by the market at only $60.

Twenty years ago, NetEase and Sohu were the leading stars of the internet. Today, NetEase’s valuation has soared to between $60 billion and $90 billion, widening the valuation gap to an astonishing 100 times. This reflects not just financial numbers but also the ongoing voting of young users for product value.

Financial Report Games: What Are Young Consumers Seeing Through?

Sohu’s 2025 financial report shows a full-year net profit of $234 million, seemingly a good sign of turning losses into profits. But financial details reveal another truth—subsidiary Changyou reversed $285 million in deferred income tax due to tax policy adjustments, directly boosting current profits. Removing this “one-time boost,” Sohu’s true operating condition shows a loss of $51 million.

Young investors and consumers are becoming increasingly sensitive to such financial figures. When reports fail to truly reflect a company’s profitability, the market votes with its market value. This voting directly results in the starkly different valuations of the two companies.

Old Game Strategies vs. Product Matrix: Who Captures Young Hearts?

Sohu’s revenue structure exposes its biggest weakness—game business contributes nearly 90% of revenue, with the 2007-launched “Tian Long Ba Bu” still accounting for over 60% of gaming income. This means an almost 20-year-old product still carries the company’s entire commercial dream.

Relying heavily on a single old product is hardly attractive to young players. According to Sohu’s R&D pace, new products won’t launch until late 2026 or even 2027. This timeline indicates that Sohu will rely on nostalgia to sustain revenue for over a year.

In contrast, NetEase’s approach is immediately apparent. From the long-term operation of “Fantasy Westward Journey,” to innovative attempts like “Nishui Han,” and the wildly popular “Eggy Party” among young players, NetEase has built a resilient game product matrix. When one area dims, another shines—this is the risk management capability a billion-dollar company should have, and why young people keep paying for it.

Generational Leadership Styles: Personal IP or Sharp Core Business?

The choice of leadership, to some extent, determines a company’s direction. Zhang Chaoyang now resembles a top-tier influencer—delivering over 300 physics lessons in live streams, deriving relativity, calculating black holes, trying to drive growth of “attention flow” social products through personal IP and knowledge content.

This “anti-algorithm” ideal of real-person social is romantic, but in an era dominated by algorithms, this personal traffic ultimately contributes only a drop in the bucket for a listed company’s revenue. Young users are accustomed to algorithmic recommendations. Zhang’s physics classes may attract a fan base, but they won’t translate into business growth.

On the other hand, Ding Lei rarely makes high-profile statements. NetEase’s logic is quiet but sharp—focusing on core game development, using AI to optimize the entire R&D process, and pushing cost reduction and efficiency to the limit. Every new game launched by NetEase is accompanied by both user growth and revenue increase. This “less talk, more action” style is exactly the operational model young entrepreneurs and young users trust most.

Results of Strategic Differences: Dispersed Resources vs. Focused Breakthroughs

Sohu’s pioneering spirit was once an advantage—trying everything from portals, videos, social, to live streaming. But the result was repeated resource dispersal, weakening its competitive edge in core areas. From the explosion of mobile internet to the rise of short videos, Sohu has always been a step behind. Its advertising business has shrunk to just 10%, illustrating how serious the loss of market share has been.

Young entrepreneurs have summarized the rule: doing too many things leads to mediocrity, and resource dispersal ultimately results in overall lagging behind. NetEase has proven another path—focusing on making great games, turning gaming into an unshakable core asset.

Cash Reserves and Market Cap Dilemma: Sohu’s Survival Code

Perhaps it’s too early to sing the swan song. That $1.2 billion in cash reserves gives Sohu an enviable buffer and flexibility. While many internet companies struggle with fundraising, Sohu has accumulated enough “grain.”

This makes Sohu like a wealthy relic of the era—marginalized on the main stage but able to move forward at its own pace. This “slow” may be Zhang Chaoyang’s way of fighting anxiety, or perhaps the only survival wisdom Sohu has under the shadow of giants.

But when seeing the $600 million market cap on the screen, young people clearly understand—the golden era belonging to Sohu is gone for good. Today, Sohu is more like a “living fossil” in the internet world, sustaining itself with $1.2 billion in cash, drifting slowly in the tide of the times. The voting of young investors ultimately favors a more vibrant company with a richer product matrix and clearer strategic direction—NetEase. The market cap gap is essentially a dialogue between two eras and two groups of people.