Renren Evades Red Flags to Raise $743M and Soar 40 Percent on IPO Day
Investors are ravenous for social networking and Chinese Internet companies. That’s the only rational explanation for Chinese social network Renren’s debut on the New York Stock Exchange today, which raised $743.4 million and saw shares sustain a 40 percent gain in afternoon trading.
The successful IPO comes despite the fact that 1) Renren is not profitable, 2) it has only 31 million active users and declining growth numbers in light of increased competition, and 3) the company lowered its growth numbers since first filing to go public and the head of its audit committee resigned from the company’s board earlier this week after allegations of fraud at one of his other companies.
But did we mention? China! Social network! SocialnetworkChina!
Shares of Renren opened at $14 and were trading above $18 the rest of the day.
Investors in Renren, which also offers group buying deals and games, include Softbank, DCM and General Atlantic, and the company is also allowing Alibaba Group, China Media Capital and CITIC Securities to buy $110 million worth of shares today through a private placement. The company had revenues of $76.5 million in 2010 with a net loss of $61.2 million.
Image credits: Stock chart via Marketwatch; Renren growth chart via RedTech Advisors, which has a PDF report on the company here.