Renren’s U.S. Share Sale

China Internet Stocks Tumble Before Renren’s U.S. Share Sale

http://www.bloomberg.com/news/2011-05-03/china-internet-stocks-tumble-ahead-of-renren-s-share-sale-1-.html
By Belinda Cao - May 4, 2011 6:10 AM GMT+0800Chinese Internet companies fell in U.S. trading before an initial share sale by Renren Inc. on speculation the new listing in China’s biggest social-networking website may offer more opportunities for growth.

Sina Corp., owner of the Twitter-like Weibo service in China, sank 9.5 percent, the most since February 2009, to $122.22 at the close of trading at 4 p.m. in New York. Baidu Inc., which owns the country’s most popular online search engine, slid 5.2 percent. Sohu.com Inc. (SOHU) and NetEase.com (NTES) Inc. also tumbled the most in at least 17 months.

Renren, which leads Chinese social-networking websites by page views, is seeking a valuation more than double that of Facebook Inc. in an initial public offering today to raise as much as $743.4 million. At least three Chinese Internet companies announced IPO plans last month.

“You want to be in the best one of these companies with the best prospect and the best opportunity,” said Timothy Cunningham, a manager at Santa Fe, New Mexico-based Thornburg Investment Management, which oversees about $78 billion. “If a new and better one comes, you definitely think about shifting the money in the new one.”

Renren and at least 17 other companies worldwide are attempting to raise at least $2.5 billion in IPOs this week, data compiled by Bloomberg show. The Beijing-based Renren is offering 53.1 million American depositary receipts for $12 to $14 each, according to a filing with the U.S. Securities and Exchange Commission. NetQin Mobile Inc., a Chinese mobile-phone software provider, will offer 7.14 million ADRs this week at $9.50 to $11.50 a share, the company said April 26.

Chinese Valuations

Youku.com Inc. (YOKU), the Beijing-based online-video site, trades at more than 100 times 2010 sales following its December IPO. Qihoo 360 Technology Co., the provider of computer anti-virus products and Web browsers, has almost doubled in value to 56 times last year’s sales since its March 29 IPO, when it raised $175.6 million.

Baidu’s decline trimmed its gain this year to 45 percent this year, having reached a record $152.37 last week. Sina’s shares surged 78 percent this year and hit a record $142.83 on April 20. Sohu, which owns China’s fourth-most visited website, also rose to a record last week and has gained 49 percent this year.

Some Chinese Internet stocks may have “high valuation risks,” Kai-Fu Lee, a former Google Inc. executive whose Beijing-based venture fund invests in startups, said in an April 15 interview on Bloomberg Television.

Site Users

Renren, whose name means “everyone” in Chinese, had 117 million users as of March 31, less than a quarter of the more than 500 million users Facebook has globally. The company boosted the maximum sought in its IPO by 27 percent on April 29.

Compared with their U.S. peers, Chinese Internet companies are early in their growth stage, Cunningham said.

“The number of Internet users as a percentage of total population is still relatively small, the amount spent per capita still pretty small, all these different ways that you can see huge growth for a long period of time,” he said. “That’s what investors want, sort of open-ended growth story.”

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos atpapadopoulos@bloomberg.net

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