Renren shares soar on Wall Street debut
NEW YORK: Shares in Renren soared Wednesday as the social network seen as China’s answer to Facebook made its debut on Wall Street.
Renren, which is trading in New York under the symbol “RENN,” raised $743.4 million through the sale of 53.1 million American Depositary Shares. The Beijing-based company initially priced the shares at between $9 and $11 but later raised the price to $14. Renren shares soared as high as $24 during the day’s trading on Wednesday before closing at $18.01.
Renren chairman and chief executive Joseph Chen, who rang the opening bell at the New York Stock Exchange, said the listing of the company is “a great moment for Renren.”
“Today, Renren became the first social networking services company to be listed on the New York Stock Exchange… I believe this will enhance our brand and further validate our position as the leading real name social networking Internet platform in China,” he said.
“This listing brings us an important step closer to realizing our vision to define social networking experience and to revolutionize the way that people in China connect, communicate, entertain and shop,” Chen said.
Renaissance Capital said Renren, as the first major social network to launch an initial public offering was “poised to benefit from significant investor enthusiasm surrounding social networking… Investors are clearly excited by the secular story of China’s increasing Internet penetration and the country’s rapid forecasted online advertising growth,” it said.
Not all Wall Street analysts were enamored with Renren. “Due to the restated growth targets of last week and then due to the head of the audit committee resignation just yesterday, we are having a hard time jumping on the enthusiasm train,” said Jon Ogg of 247WallSt.com.
“Our biggest concern is that Chinese companies have been under a flag due to a blurring of fact and fiction when it comes to company numbers and finances,” Ogg said.
In papers filed with the US Securities and Exchange Commission (SEC), Renren said it had 117 million activated users as of March 31 and has been adding approximately two million new users a month over the past three months.
Renren reported net revenue of $76.5 million in 2010, up from $46.7 million the previous year, and a net loss from continuing operations last year of $61.2 million.
The Chinese site, whose name means “everyone,” was founded in 2005 and is the top social networking site in China, where government censors have blocked Facebook.
Citing its risk factors in the SEC documents, Renren said it may face “potential competition from global social networking service providers that seek to enter the China market.
“The websites of some global social networking service providers, such as Facebook, are currently not accessible in (China),” it said.
“We cannot assure you, however, that this competitive advantage will continue to exist, particularly if international competitors such as Facebook form alliances with or acquire (Chinese) domestic Internet companies, or otherwise enter the China market.”
Renren is the latest Chinese Internet company to look to the US capital market, where investors have been keen to snap up stakes in technology firms based in the world’s fastest-growing major economy.
China also has the world’s biggest Internet population with at least 457 million users.
No US social networking sites have gone public although LinkedIn, the business-oriented social network, has registered with the SEC for an IPO.
Facebook, the world’s largest social network with more than 500 million members, is not expected to go public before 2012.