It looks like the hype over Renren might have been a little premature. Stocks for Renren (RENN.N) have been in decline for several days shortly after their debut on the New York Stock Exchange. The frothing at the mouth that was prevalent only a week ago now seem like the ravings of a tech-bubble lunatic.
Reuters reports that RenRen’s stock began its decline one day after its ‘spectacular’ May 4th IPO, losing 6.33 percent on May 5th, then 0.41 percent and 4.58 percent on the two following days of trading. The postmortems have already begun:
“The issue is two-fold: first you have these lingering accounting concerns that are increasingly troubling as more and more investors peel back the layers on Renren and do some additional due diligence,” Morningstar IPO strategist Bill Buhr told Reuters.
“Secondly, this is a business — Internet and content — that the Chinese government could at some point either attempt to regulate, or flat-out censor, which would diminish the value of Renren’s product and content offering almost immediately,” Buhr said.
Following the resignation of an American member of the board, questions about the real numbers of users on the site, and concerns about its accounting practices, it would seem that investors have sobered up and realized that Renren comes with a great deal of baggage.
And now there appear to be members of the media doing a little victory dance after having whipped up the hype in the first place.
O, how the barely-mighty-for-a-week have fallen.
By Fan Huang