Renren, China’s largest social networking site, went public today, earning $734.40 from its IPO. Bloomberg reports:
The Beijing-based company sold 53.1 million American depositary receipts at $14 each, the high end of the proposed range, according to a company statement. The shares rose $4.01 to $18.01 at 4 p.m., after earlier touching $24. The ticker symbol is RENN.
At its $14 initial price, Renren would be valued at 72 times last year’s sales, compared with 25 times for social- networking site Facebook Inc. as valued by Goldman Sachs Group Inc.’s investment in the U.S. company. Renren commands a premium because China’s economy may grow three times faster than the U.S. and about two-thirds of the population isn’t online.
See also an interview with Joseph Chen, founder and chief executive officer of Renren Inc.:
Meanwhile, on his MarketWatch blog, Cody Willard advises investors to “run the other way from Renren”:
I mean, don’t get me me wrong, Renren is awesome and is going to be a huge success with hundreds of millions of users in China alone in the next decade. But I wouldn’t touch the stock with a ten foot pole. I don’t trust Chinese company disclosures and numbers as a general rule, and Renren has already had to correct numbers in their IPO prospectus and has had a board member resign already because of accounting issues at another company where he was on the board.
That said, the real story here is that Renren and all these other tech companies are coming public, raising huge money and are just starting to spend that huge money. The company’s one of dozens of tech/web/app/smartphone/gaming companies coming public in the US over the next couple months, part of the biggest IPO binge on Wall Street since the market topped out in 2007.
An article last week from Reuters also pointed out a number of red flags for Renren investors including “censorship, patents, [and] accounting.”