Renren First Financial Report Since IPO Loss Narrow

Renrens share price has been tumbling since its mega size IPO. Investors worried if they have been paying too much for the so-called Chinese Facebook. It went as low as US$6.55 last Friday, more than 50% off its IPO price of US14 a share.

But every cloud has asilver lining. Renren released its first financial report after its IPO. It significantly narrowed its loss: 78.5% decrease from a year earlier. And it looks like the so-called Chinese Facebook might be break-even soon. The news boost its share price. It closed at US%7.6 on Monday,up 8%.

One thing Renren worried investors the most is Renrens financial. After all,last year it made a loss of US$64.2 million and its revenue was a mere US$76.5 million. That means it lost 84 cents for every dollar it made. The companys net loss for Q1 of 2011 was US$2.6 million, compared withUS$12.1 million in the same period last year. And its revenue increased46.6% toUS$20.6 million, of which, advertising more than double to US$8.1 million. AndIVAS revenues (mostly game) was up24.7% toUS$12.4 million.

If the trend continues, it expects revenue to increase to US$29 to US$30 million next quarter, representing 46% to 51% year-on-year growth. If Renren can turn profitable soon, the company might not be overpriced any more. Actually, it might start to look like a good investment. Deutsche Bank analyst, Alan Hellawell,gives Renren a 12-month target price of US$8.42 a share.

Other points worth noticing:

-Renren has targeted 35% user base growth per year

- The number of activated users increased from approximately 91 million as of March 31, 2010to approximately 117 million as ofMarch 31, 2011, and further to approximate! ly 122 m illion as ofMay 31, 2011.

- The monthly unique log-in users increased from approximately 23 million inMarch 2010to approximately 31 million inMarch 2011, and to approximately 33 million inMay 2011.

- Within the IVAS revenues, its social commerce services (Nuomi.com), which was launched inJune 2010, hadUS$0.9 millionof net revenues for the first quarter of 2011.

- Alan Hellawell,estimates that 30% of Renrens traffic is mobile, and that the number of mobileusers tripled since Jan 2011.

- Alan also views Renren as a clear beneficiary of the 3G &smartphone age in China, and expect location-based and mobile commerce userbehavior to broaden over time.

- He alsoestimates that college students represent 35-40% of Renren users. Their dailyactivity is significant: roughly 50% of these students log in on a daily basis.

Related posts:

  • Three More Reasons Why Renren Is Not Facebook of China
  • Kaixin IPO in 2 months
  • 360 Announces its Strategic Partnership with Renren



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