Coming Soon to the NYSE: The Facebook of China
by Alexander Moschina, Investment U Research
Monday, April 25, 2011
Mark Zuckerberg may be taking his time drawing up an IPO for Facebook, but for Renren Inc. CEO Joseph Chen, there's no time to waste...
The Beijing-based company behind China's largest social networking site, Renren.com - known as the "Facebook of China" - filed papers with the SEC on April 15. And on May 4, it will debut on the New York Stock Exchange under the symbol RENN.
Renren is hoping to raise $530 million with an IPO between $9 and $11 per share. It could easily turn out to be a bargain for investors... that is, if the company goes the way of other Chinese internet superstars like Baidu, Inc. (Nasdaq: BIDU) and Youku.com Inc. (NYSE: YOKU).
And so far, it looks promising...
Chinese Censorship Will Continue to Fuel RENN's Expansion
Thanks to a lack of options (at least ones that comply with China's rigid censorship guidelines), Renren.com fast became the most-visited social networking site in the country.
It was the same story last year with Sina Corporation (Nasdaq: SINA). And in the eight months since the launch of Sina's Twitter clone, Weibo, its stock has shot up an incredible 239 percent - from $42.96 to more than $145 per share.
Considering Renren is to Facebook as Sina is to Twitter, history could easily repeat itself. Though really, by the numbers, Renren has the potential to be much bigger...
Based on the Popularity of Facebook vs. Twitter, Renren Could Put Sina to Shame
The most recent statistics published by Twitter say that it has 175 million registered users worldwide. Meanwhile, Facebook is up to more than 600 million.
And because of its easy-to-grasp platform, Facebook appeals to a much larger audience. Don't believe it? A recent survey confirmed that people over 65 are joining the social networking site faster than any other age group.
That should certainly give Renren a leg up over the competition. And while the three-year-old site only has 117 million users as of March 31, its overall usership has grown more than 254 percent.
Of course, that's not the only number that's growing...
Renren is Growing More Profitable Every Day
The company's net revenue has shot up more than 450 percent - from $13.8 million in 2008 to $76.5 million last year. And like Facebook, it derives a large portion of its income from online advertising (the rest it collects from online gaming).
Bottom line: Renren looks like Facebook... it generates profits like Facebook... and it's growing at an amazing pace like Facebook...
The only difference is, starting May 4, you can actually get your hands on it.