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May

2011

PopCap IPO: 4 reasons to invest in the social gaming giant

by Fred Mason

PopCap IPO Date: Tentatively slated as early as November.

Most popular PopCap games: Plants vs. Zombies, Peggle, Zuma, Bejeweled, Bookworm

Total number of PopCap game downloads since 2000: 1.5 billion+

Now that PopCap Games, Inc. has confirmed rumors that the company is planning an IPO (which could come as early as November), investors are taking a more serious look at the 11-year-old company. Here are four reasons to consider buying stock in PopCap:

1) “477 million.” That’s the total number of internet users in China, and PopCap announced this week that it has forged a partnership with the so-called “Facebook of China,” Renren, Inc. (NYSE:RENN), to start tapping that market with the launch of Plants Vs. Zombies behind the Great Firewall.

2) The race to Wall Street. While it’s unclear when PopCap rival Zynga Game Network, Inc. – the creator of Farmville and several other runaway successes on Facebook and smartphones – might IPO, the spoils could favor the company that takes the plunge first. Lest we forget, Rovio (the maker of Angry Birds) has been floating talk of an IPO, too (check out my post Rovio stock suddenly becomes hot commodity for more). PopCap has set its sights on November, and we’re yet to hear any dates out of Zynga or Rovio.

3) Turning Japanese. PopCap’s turned its gaze not just on China but Japan as well. On Thursday (the same day Plants Vs. Zombies debuted in China), PopCap released gaming platform PopTower on Japan’s most popular social networking platform, GREE. The PopTower platform will eventually allow GREE users (all 25 million of them) access to several of PopCap’s most popular games including Bejeweled, Chuzzle and Zuma. The games will be enhanced with social features provided by famous Japanese gamemaker TAITO Corporation.

4) Coming to an Android near you. PopCap’s finally taking Chuzzle and Plants Vs Zombies into the Android Market. … Actually, they’ve inked a deal (with undisclosed terms) to offer the games exclusively on Amazon’s Appstore for two weeks before pushing the games out on Google’s official Android Market. Not only will the “exclusive” launch give PopCap’s games more visibility, it’s presumably bolstering their bottom line, too, thanks to a large check from Amazon. The fact that Android’s the most ubiquitous smartphone platform on the planet will take care of the rest.

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Tags: PopCap IPO, RENN, RenRen, social gaming stocks, Zynga, Zynga IPO
Posted in Internet stocks, IPOs, private companies, tech stocks | No Comments »

May

2011

RenRen IPO: 5 things you don’t know about ‘China’s Facebook’

by Fred Mason

RenRen’s IPO date has arrived. Shares in the “Facebook of China” will begin trading today (May 4, 2011) on the NYSE under ticker symbol “RENN.” The whole affair has the feel of being backstage before a Justin Bieber concert, which is to say traders are giddy.

Finally, we’ll get to sink our hands into a genuine social networking stock. Better yet, it hails from behind the Great Firewall in the world’s largest Internet market. Expect fireworks.

While the mainstream media has flooded the tubes with news stories on RenRen, here are five things you might not have known about the “Facebook of China”:

1) Pony up for those brand pages. RenRen may have copied the master (Facebook) in the beginning, but it’s taken a slightly different tact toward advertising. Rather than giving away “fan pages” to businesses for free, RenRen charges companies upwards of $90,000 to launch branded “mini-sites” on RenRen. That’s one way to solve the revenue problem that’s hanging over Facebook’s head.

2) It’s messy behind the scenes. News broke yesterday that one of RenRen’s audit-committee chairmen was stepping down after alleged financial fraud at a different Chinese tech company where he serves as CFO. Perhaps that’s not a big deal (since it stems from allegations at a different company), but this might give you pause: RenRen’s had trouble spitting out just how many users the site has. First, they claimed user growth of 29 percent during Q1. A week and a half later, the social networking site backpedaled, saying growth was actually more like 19 percent. Hmmm… As it stands right now, RenRen claimed to have 117 million activated users as of March 31, 2011. Take it for what it’s worth.

3) Strength in numbers. The PRC is home to the world’s largest Internet market with more than 420 million Web users, according to Internet World Stats. That’s nearly twice the number of surfers in the U.S., and China’s Internet penetration rate is just 31 percent! Compare that to the U.S., where 77 percent of the population has Web access. Clearly, the Internet growth story moving forward is going to be told on the other side of the Pacific.

4) Coupons anyone? RenRen operates a Groupon-style deal of the day clone at Nuomi.com. Launched last summer, Nuomi’s already a Top 200 site in China (per Alexa), but it does face stiff competition. The Xinhua News claims there are already more than 2,600 group buying websites in the PRC. Fortunately, RenRen’s IPO warchest might help the company market Nuomi. Execs appear more than willing to do just that as they announced plans to spend more than $30 million in advertising the site in February. They won’t lose the Groupon war without a fight.

5) Multiple social networks in one. Early in April, RenRen launched a second social networking site dubbed “Jingwei.” Jingwei targets professionals who are interested in networking opportunities. If it catches on, we might not have the opportunity to invest just in the “Facebook of China” but the “LinkedIn of China” and the “Groupon of China,” too – all in one stock. What more could you ask for in a country where only the privileged few have access to shares in Facebook, Twitter, Groupon and LinkedIn?

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RenRen IPO’s biggest hurdle might be PengYou

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A Sina Weibo IPO could be in the works as China’s Twitter moves to Weibo.com

Tags: Facebook, Groupon, Jingwei, LinkedIn, Nuomi, RenRen, RenRen IPO, social networking stocks
Posted in Chinese stocks, Internet stocks, IPOs, private companies, tech stocks | No Comments »

May

2011

5 reasons NOT to invest in the RenRen IPO

by Fred Mason

Let me preface this by saying I’ve drank the RenRen Kool-Aid. How could any self-respecting geek turn down the opportunity to invest in the first major U.S. IPO for a social networking stock – especially one that’s being dubbed “the Facebook of China”? Still, there are warning signs that warrant being pointed out (even if you ultimately decide to ignore them in what will probably be a feeding frenzy on IPO day):

1) Competition. As it stands now, Facebook.com is blocked by the Chinese government. Rumors are running rampant that a partnership with Baidu.com, Inc. (NASDAQ:BIDU) – China’s largest search engine – is imminent, though. That could be bad news for RenRen. Who needs a Facebook clone, after all, when you can get the real thing? That said, I’m still not sure Facebook’s willing to turn information on its users over to the Chinese government – particularly if those users end up “disappearing” a few days later. Even if Facebook does decide to move ahead, it won’t happen overnight.

2) How many users do we have? One of the more puzzling pieces of the RenRen IPO is trying to figure out how many people use the site. RenRen itself can’t seem to spit out an accurate number. On April 15, the company claimed monthly uniques grew 29 percent (up 7 million users) during Q1 2011, per the Daily Times. Then, on April 27, RenRen back-tracked saying that monthly uniques were actually up just 19 percent (or 5 million users) during Q1. Weird…

All told, RenRen claims to have 117 million activated users as of March 31, 2011. Sources outside the company including Beijing’s Analysys International had previously reported the site has as many as 160 million registered users. I guess estimates will have to suffice.

3) Accounting abnormalities. “Prior to this offering, we have been a private company with limited accounting personnel and other resources for addressing our internal control over financial reporting,” RenRen writes in its F-1 filing with the SEC. An independent review of the company’s accounting procedures turned up “one material weakness and one significant deficiency.” Namely, the company has “insufficient accounting personnel with appropriate U.S. GAAP knowledge,” no stated plan for investing cash surpluses, and poor management of “treasury functions.” That makes RenRen the sort of company that embezzlers and fraudsters love. And fraudsters aren’t in short supply in China (take, for example, the recent news that the CEO of China’s Puda Coal secretly sold the company and forgot to mention that fact to shareholders).

4) PengYou. Ultimately, RenRen’s biggest competitor might not be Facebook, but rather a homegrown rival in PengYou.com. Two weeks ago, analysts at Goldman Sachs went on the record proclaiming PengYou will “become the dominant social network in China by leveraging (Tencent’s) much larger QQ community and more developed platforms.” Although PengYou launched just five months ago, it’s already the 26th most-visited site in China (check out my post RenRen IPO’s biggest hurdle might be PengYou for more).

5) What are ethics? When RenRen first launched in 2005 as XiaoNei.com, the company labeled itself a “Mark Zuckerberg production.” Zuckerberg, the CEO of Facebook, had nothing to do with the site, of course, but that didn’t really matter to RenRen’s founders. They just made a copy of Facebook and pushed it live. RenRen has something of a reputation for stealing ideas. When Kaixin001.com launched a social networking site in China, RenRen copied it (all the way down to the color scheme) and launched the doppelganger on Kaixin.com. Kaixin001.com eventually won a lawsuit against RenRen, but you can still type in Kaixin.com and get re-directed to RenRen.com. Maybe nice guys do finish last, after all.

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3 reasons TO invest in the RenRen IPO

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RenRen IPO’s biggest hurdle might be PengYou

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A Sina Weibo IPO could be in the works as China’s Twitter moves to Weibo.com

Tags: BIDU, Facebook, PengYou, QQ, RenRen, RenRen IPO, social networking stocks, Tencent Holdings
Posted in Chinese stocks, GS, Internet stocks, IPOs, NASDAQ, private companies, tech stocks | No Comments »

Apr

2011

RenRen IPO’s biggest hurdle might be PengYou

by Fred Mason

With RenRen’s IPO date looming on May 4, investors are salivating over the first major social networking site to hit American stock exchanges. The so-called “Facebook of China” may face stiff competition in the months to come, though, as both Baidu.com, Inc. (NASDAQ:BIDU) and Tencent Holdings Ltd. (HKG:0700) have moved to aggressively ramp up their social marketing efforts in China.

China’s largest search engine, Baidu.com, is well-known among investors. Shares in the company debuted on the Nasdaq in 2005, and they’ve risen more than 1140 percent since. Earlier this month, ~~Facebook announced~~ rumors surfaced that Facebook struck a deal with Baidu to launch a new social networking site in the country (per MSNBC). No launch date has been announced (if it does indeed come to pass), but the companies will reportedly work together to build a new social networking site from scratch, as Facebook.com remains blocked by the Chinese government.

A partnership makes perfect sense. Baidu currently owns 73 percent of the search market in China but has struggled to succeed in the social networking space. The site’s reach should help it heavily promote a new social networking venture much the way Google has done with its Chrome Web browser. Facebook benefits from Baidu’s close working relationship with the Chinese government – something its needed to get past the Great Firewall.

Time is of the essence, though, and Tencent already has a head start on Baidu. Tencent operates the world’s largest online community with its wildly popular instant messaging platform, Tencent QQ. QQ claims more than 636 million active users. To put that in perspective, that’s more than twice the population of the U.S.

Tencent’s earliest foray into social networking started in 2009 with the launch of XiaoYou, a Facebook-like platform targeted at students. XiaoYou allowed users to create profiles based on nicknames (rather than real names) much like MySpace.com. We saw how well MySpace played out here, and Tencent must have taken notice.

The company scrapped XiaoYou last summer in favor of a new “real-name” social networking site dubbed PengYou (per TechRice). When PengYou launched public beta testing in September, invites were extended to employees at publicly-listed Chinese companies, including Fortune 500 companies in China, TechRice writes. By December, the site fully opened up to the public, and an Open API was released so that developers could write custom software for PengYou.

The site allows users to sync up with their QQ accounts and their SINA Weibo microblogging accounts (think the “Twitter of China”). Investors like those ideas. Late last week, analysts at Goldman Sachs actually downgraded SINA Corporation (NASDAQ: SINA) from Neutral to Sell citing a belief that SINA’s Weibo won’t be able to compete with full-scale social networks like PengYou.

“In our new analysis, we believe the most likely outcome is for Weibo to become an alternative loosely-engaged social network weighted toward its distinctive social media elements, and for Tencent Pengyou to become the dominant social network in China by leveraging its much larger QQ community and more developed platforms,” Goldman writes.

Since its launch in December (just five months ago), PengYou has grown rapidly. The social network’s currently ranked by Alexa.com as the 26th most-visited site in China. That puts it in striking distance of RenRen.com, which is ranked as the 15th most-visited site in China. It’s clear we’re witnessing the start of what promises to be a dogfight over social networkers in China. Tencent, Facebook and Baidu have entered the race late, but the finish line is a long way over the horizon.

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Tags: BIDU, Facebook, HKG:0700, PengYou, QQ, RenRen, SINA, Sina Weibo, Tencent Holdings, Weibo
Posted in Chinese stocks, Internet stocks, IPOs, NASDAQ, private companies, tech stocks, Uncategorized | 3 Comments »

Apr

2011

3 MORE reasons to invest in the RenRen IPO

by Fred Mason

I’ve been excited about this for months. Back in February, I wrote a post titled Five reasons to invest in the RenRen.com IPO, and now it looks like we’re getting really close to launch. Here are three more reasons to consider investing in RenRen’s IPO:

1) The writing on the wall. Sometimes, all it takes is investor excitement to push up the value of a stock – even in the absence of underlying fundamentals. Let’s take Youku.com, for example. Shares in the so-called “YouTube of China” IPO’d around $33 in December. Despite revenue of just $23 million and a loss of $5.6 million in the three months ending Dec. 31, shares have risen nearly 100 percent since debuting on NYSE. That puts Youku’s stock at more than 110 times annual revenue! Those are mind-boggling numbers for a company with scanty revenue and a hell of a lot of competition.

It’s hard to deny that Yoku’s trading on much of anything beyond investor exuberance, and I expect the exuberance for the “Facebook of China” to far outpace that of the “YouTube of China” – especially since even a company as large as Google (NASDAQ:GOOG) has had trouble making money with YouTube.

2) Several companies in one. Not only does RenRen operate the most popular “real name” social network in China, it’s also ventured into the professional social networking space with the launch of a LinkedIn-style network dubbed Jingwei (Read more in my post: RenRen readies for IPO by launching second social networking site, cloning LinkedIn). They didn’t stop there, though. The company also operates a Groupon-style deal of the day clone at Nuomi.com. Granted Nuomi’s one of a reported 2,612 group buying websites in China (per the Xinhua News), but RenRen’s parent company is serious about seeing Nuomi succeed. They announced plans in February to pour $30.42 million into advertising the new venture.

3) The fat part of the curve. China’s Internet growth feels a lot like the U.S. tech bubble, except for the fact that there are already lots of Chinese tech companies making real money. The online advertising market in the PRC is expected to triple through 2014 to nearly $13 billion, according to Susquehanna International Group LLP. By contrast, online advertising grew just 15 percent in the U.S. last year, per PCWorld. As advertising rates surge, the biggest beneficiaries will be social networking sites with their warchests full of invaluable data on their users. From ages to location to tastes in music and relationship status, RenRen knows more about their users than Baidu, and – if the company continues to expanding its user base – that could make RenRen even more valuable to advertisers.

Fred’s Best Guess: RenRen easily makes my list of the Top 3 IPOs of 2011. It ranks up there with LinkedIn and Russian search engine Yandex. I expect choppy (dangerous) trading for the first few days, and a steady skyward march after that. I say dollar-cost-average your way into the stock, and hold it for a year to latch onto what could very well be triple-digit gains.

Note: Fred’s Best Guess is just that: a complete guess. It does NOT constitute investment advice and should NEVER be construed as such.

RenRen IPO Vitals

RenRen expected IPO date: May 4, 2011.
RenRen ticker symbol: NYSE:RENN

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Tags: China, chinese tech stocks, Facebook, Facebook IPO, Groupon, Jingwei, Nuomi, RENN, RenRen
Posted in Chinese stocks, Internet stocks, IPOs, private companies, tech stocks | No Comments »

Apr

2011

Facebook + Baidu vs. Renren: Let the war begin (BIDU)

by Fred Mason

The ante’s been upped in China’s social networking wars. Facebook plans to partner with China’s largest search engine Baidu.com, Inc. (NASDAQ:BIDU) to build a social networking site from the ground up. The move would smuggle Facebook behind the Great Firewall – a place where few other foreign social networks are able to tread.

Shares in BIDU rose nearly 5 percent in pre-market trading on the news although it could be a while before Facebook.cn becomes a reality. “If there is a deal, it must still make it over some imposing regulatory hurdles in China, and it will attract some attention from Capitol Hill,” writes Gady Epstein at Forbes.

Epstein’s optimistic the deal will ultimately work, though, as Zuckerberg appears “fully committed to make the kinds of concessions to do business in China that did not come so easily for Google.”

China’s social networking market is particularly brutal. Renren.com claims 160 million active users in the PRC, and it got its start as a Facebook clone. It was such a perfect clone that it matched Facebook’s DNA down to the chromosome – going so far as calling itself “A Mark Zuckerberg Production” on its homepage in the early days.

Everything that Facebook does, Renren does, too. The site launched in 2005, and spread virally across college campuses in China before eventually opening up to the public (just as Facebook did one year earlier). It recently launched Renren Places, a “Like” button and a Groupon-style deal-of-the-day feature. In many ways, then, Facebook’s biggest competitor in China will be itself, as it will need to find a way to differentiate itself from Renren.

That won’t be easy. Although Renren closely mirrors Facebook’s functionality, the site’s also started launching its own innovations from streaming music services to paid brand pages which operate like mini-sites on Renren.com. Some reports indicate Renren is charging as much as $90,000 for its customizable brand pages.

Renren could also generate a huge warchest when it moves ahead with a planned IPO. The company appears to be diversifying in the run-up to that IPO, too. Just last week, I wrote about Renren’s launch of a LinkedIn/Quora clone dubbed Jingwei.

Clearly, Zuckerberg has his work cut out for him. But a high-profile partnership with Baidu should give Facebook plenty of marketing clout and – just as importantly – a decent working relationship with China’s ruling elite. Both are requirements if Facebook hopes to challenge Renren.

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Tags: BIDU, Facebook, GOOG, Jingwei, LinkedIn, Quora, RenRen
Posted in Chinese stocks, Internet stocks, IPOs, NASDAQ, private companies, tech stocks | 1 Comment »

Apr

2011

RenRen readies for IPO by launching second social networking site, cloning LinkedIn

by Fred Mason

As if the upcoming RenRen IPO wasn’t enticing enough, “China’s Facebook” has sweetened the pot with the launch of its own LinkedIn-like social networking site aimed at Chinese professionals. Dubbed Jingwei, the beta site launched as an invitation-only network, but recently opened up to the public. Media reports indicate it features LinkedIn’s core functions including Profiles, Connections, Groups and Companies.

“The private beta version is still a bit buggy, even some core features such as Search are not working properly yet,” TechNode’s Gang Lu wrote recently. “But looking at its menu, it’s more or less like Linkedin.”

Better yet, Jingwei has an integrated question and answer component that’s drawn inspiration from Palo Alto-based Quora.com. Quora allows users to post and answer questions, vote answers up or down and collaborate to provide the best responses.

Jingwei plans to host “Company Day” events starting this month. The online-only gatherings will allow employees from global Fortune 500 companies to ‘mingle’ on designated pages on the site, according to spokesperson Shu Wei.

Interestingly, China doesn’t have a truly dominant player in the professional social networking space. LinkedIn itself claims 1 million active users in China, and the country’s current domestic leader, UShi, is barely a year old. UShi’s growth looks promising, but the site currently ranks as the 900th most popular site in China (per Alexa). LinkedIn, on the hand, ranks as the 230th most popular site in the People’s Republic. By combining the functionality of LinkedIn and Quora, Jingwei might be able to poach a nice chunk of traffic from its competitors.

Why buy into a RenRen IPO?

Even without Jingwei, there are several reasons to get excited about RenRen’s upcoming IPO. For one, the company could be the first major social networking site in the world to start trading on U.S. exchanges. My gut says any investor in the country looking for exposure to the social networking space will buy in – no matter how preposterous the company’s valuation.

RenRen’s also operating the most popular social networking site in the world’s largest Internet market. The site currenctly claims 160 million members. That’s nowhere near Facebook’s 600+ million, but there are indications that RenRen’s done a better job of monetizing the traffic it does get. While Facebook lets brands and companies create “fan pages” for free, for example, RenRen charges brands upwards of $90,000 to create their own “mini-sites,” according to Inventorspot. The student, it seems, might finally be outshining the master.

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Tags: Facebook, Facebook IPO, Jingwei, Quora, RenRen
Posted in Chinese stocks, Internet stocks, IPOs, NASDAQ, private companies, stock tips, tech stocks | 1 Comment »

Mar

2011

Renren vs. Kaixin001: Which IPO looks more promising?

by Fred Mason

The battle of the Facebook clones is raging behind China’s Great Firewall, and the war is about to cross international borders as two of the country’s leading social networking sites, Renren.com and Kaixin001.com, plan to IPO in the U.S. in the coming months. Here’s what you need to know:

RenRen launched in December of 2005 as a blatant copy of Facebook, going so far as using the the same color palette and site layout. It even including the phrase “A Mark Zuckerberg Production” on the site’s home page. The company’s model started much like Facebook’s, too, launching first on college campuses where it spread virally from one university to the next before eventually opening up to the public.

Not even a year later, RenRen was acquired by Chinese holding company Oak Pacific Interactive, which scrubbed the site of its “Zuckerberg” reference and got serious about turning the property into an online cash cow. Five years later, RenRen’s the most popular social networking site in the country in terms of unique visitors. It’s particularly popular among tech-savvy college students, who increasingly access the site from their phones.

Kaixin001 may not garner as many eyeballs as RenRen, but it also serves a different niche: the more affluent, white-collar market. That’s exactly the sort of market that advertisers covet, and perhaps it’ll be the saving grace that makes Kaixin001 attractive as a potential investment.

While Kaixin001 started as a Facebook-like social networking site in 2008, the company aggressively moved to enter the social gaming sphere by building in-house “apps” that users could play without downloading special software.

RenRen felt left out. So executives at the company decided to pull a shank and thrust it deeply into Kaixin001′s back by buying the rights to Kaixin.com (NOT kaixin001.com). RenRen twisted the shank by building an online gaming site on Kaixin.com that was remarkably similar to Kaixin001.com. Fast forward a few years, and Kaixin.com’s functionality has been folded into RenRen. In fact, if you type Kaixin.com into your browser now, you’ll automatically get forwarded to RenRen.com.

The branding confusion is far from ethical, but it could be a big factor behind RenRen’s surging success. Not only that, but RenRen was fast to embrace an “open” gaming platform that allows outside developers to build and release games on the site.

Comparing the “global reach” (on Alexa) between RenRen and Kaixin001 seems to indicate that the trend is in RenRen’s favor:

RenRen’s audience has grown over the past year while Kaixin001′s has tapered. And yet, Kaixin001′s stickier. Users who DO end up there tend to stay significantly longer and look at more pages – in part, perhaps, because the site targets white collar workers who have Web access at work. Here’s how pageviews at the two site stack up:

They always say that the trend is your friend in investing, and I think the same is true about social networking sites. Kaixin001 is obviously losing its sheen while RenRen’s growing. Unless the management team at Kaixin001 uses its possible IPO windfall to change tact and offer users something truly innovative, it could suffer the fate of MySpace. And that’s a road no one wants to go down.

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Tags: Kaixin001, RenRen, social networking stocks
Posted in Chinese stocks, Internet stocks, IPOs, NASDAQ, private companies, stock tips, tech stocks, trading stock | No Comments »

Feb

2011

Yandex IPO date drawing near

by Fred Mason

Yandex may file for an IPO with the U.S. Securities and Exchange Commission in weeks, and the company could go public as soon as June, according to a report from Bloomberg

UPDATE: Yandex’s IPO date is set for May 24, 2011 on the NASDAQ under ticker “YNDX.”

Yandex operates the most popular search engine in Russia. Yandex.ru is also the most-visited Web site in the country and the 24th most-visited Web site in the world (per Alexa).

The site’s managed to resist aggressive competition from Google, Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) with Yandex’s search market share in Russia rising from 52.4 percent in December 2009 to 55.5 percent in December 2010. Those gains could get a further boost after the company inked a deal late last year to integrate Facebook into its pages.

Revenue at Yandex surged 43 percent last year to $410 million, Bloomberg reports, with the total number of advertisers on the site growing by more than 40 percent to 180,000+. I’ve long maintained that Yandex will have a powerful IPO, and I ranked it as my second-favorite IPO on my Unofficial Tech IPO Calendar for 2011. First place? That goes to Chinese social networking site RenRen.com.

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Tags: GOOG, MSFT, RenRen, Yandex.ru
Posted in Internet stocks, IPOs, NASDAQ, private companies, Russian stocks, tech stocks | No Comments »

Feb

2011

Five reasons to invest in the RenRen.com IPO

by Fred Mason

In what promises to be one of the most exciting IPOs of the year, China’s leading social networking site, RenRen.com, is planning an IPO in the U.S. Here are five reasons to consider investing in RenRen’s IPO:

1) Reach. RenRen is China’s undisputed leader in social networking. A recent article on TechRice claimed the site has more than 160 million registered users. The site’s user base surged by more than 60 million people between October 2009 and October 2010. That’s good enough to rank RenRen as the 16th-most-visited site in China (per Alexa) and the 108th most-visited site in the world. The site’s closest competitors aren’t far behind, though. Kaixin001.com is ranked 19th in China, and 51.com, is ranked 43rd in China. Still, the visibility of a large IPO could help cement RenRen’s spot as a market leader.

2) The market size. At somewhere between 420 and 460 million, the size of China’s Internet population dwarfs even the entire population of the U.S. And those users are flocking to social-networking sites, which had 176 million users last year, up 68 percent from the year before, MarketWatch reports.

3) Innovation. RenRen.com started as a Facebook clone. It was such a blatant copy of Facebook that it even labeled itself a “A Mark Zuckerberg Production.” The site’s evolved into its own entity since its 2005 origins, although it still mirrors many of the same offerings on Facebook.com. RenRen, for example, unveiled RenRen Places (a check-in system that lets users broadcast where they are) around the same time that Facebook launched Facebook Places. The company also launched a RenRen Like button that can be embedded on Web site pages and RenRen Public Pages, which can be used by local businesses and organizations to promote events and offerings – both are features that were first launched on Facebook.

Still, there are signs that RenRen’s beginning to experiment and develop its own ideas from the ground up, and that could lead to significant new revenue streams. Most notably, RenRen has launched its own Groupon-style coupon system and a streaming radio service called Renren Aiting. The wide acceptance of virtual currencies in China also promises interesting revenue possibilities on RenRen as the company strengthens its applications platform and continues biting into the country’s large online gaming user base.

4) Surging revenues. While there isn’t any publicly available financial data on Renren yet, the company has said its advertising grew by “more than” 100 percent last year and in 2009, according to FT.com. Facebook.com, which is the second most-visited site in the world, reportedly had revenues of $1.2 billion over the first nine months of 2010.

5) Social media is just plain different in China. Cultural differences in media consumption in the U.S. and China could actually make RenRen.com more profitable than Facebook. Chinese surfers have long shown different consumption patterns in their browsing habits on the Web. “The usage of social media in China is off the charts relative to almost any country in the world,” Thomas Crampton, Asia-Pacific director of Ogilvy’s 360 Digital Influence, a social media marketing service, told HuffingtonPost. There’s actually a strong propensity there to follow and engage with brands and businesses on social networking sites. 87 percent of social networking users in China follow or “friend” brands. That makes interacting with companies the second-most popular activity on RenRen and other social networking sites, according to Ogilvy’s research. That’s the sort of engagement marketers dream about, and it could push RenRen into the green a lot faster than analysts might expect.

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Tags: Facebook, Facebook IPO, RenRen
Posted in Chinese stocks, day trading, Internet stocks, IPOs, NASDAQ, private companies, tech stocks | 2 Comments »

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