Renren Inc. RENN.nyse was one where being cautious almost looked and felt silly going into the IPO. After all, it was supposed to be “The Facebook of China” and anything tied to social networking was supposed to be hot.
The problem is that the company previously overstated its growth rates in its prospectus. Then, to add insult to injury, the head of its audit committee resigned. These were two huge red flags (no pun for China) in this IPO. Still, investors wanted these shares no matter what. We even gave the name for Renren’s IPO pricing as “Issues Be Damned!” but the shares still were massively higher after its shares began trading.
Now we have a situation where “China IPO” is tarnished. Look at Renren now… Shares hit $14.00 this morning, which is now exactly where the Renren pricing went out. The offering was some 53.1 million ADSs at $14.00 per share. The stock’s IPO-date opening price was listed as $19.50 and the official post-IPO high was $24.00. Then shares closed at $18.01 versus a low of the day of $18.00. Sadly, that means that anyone who bought shares in the secondary market and decided that they wanted to own a piece of “The Facebook of China” got crushed.
Then you can throw some irritants on your cuts by seeing how poorly this one has done. Shares closed down each day since the IPO… $16.87, $16.80, $16.03, and then ultimately at $14.75 just yesterday.
Now we have shares after more than 40 minutes down another 6% at $13.15 and the new trading low is listed as $13.04 today. That implies that Renren has become a busted-IPO
The problem is that the company previously overstated its growth rates in its prospectus. Then, to add insult to injury, the head of its audit committee resigned. These were two huge red flags (no pun for China) in this IPO. Still, investors wanted these shares no matter what. We even gave the name for Renren’s IPO pricing as “Issues Be Damned!” but the shares still were massively higher after its shares began trading.
Now we have a situation where “China IPO” is tarnished. Look at Renren now… Shares hit $14.00 this morning, which is now exactly where the Renren pricing went out. The offering was some 53.1 million ADSs at $14.00 per share. The stock’s IPO-date opening price was listed as $19.50 and the official post-IPO high was $24.00. Then shares closed at $18.01 versus a low of the day of $18.00. Sadly, that means that anyone who bought shares in the secondary market and decided that they wanted to own a piece of “The Facebook of China” got crushed.
Then you can throw some irritants on your cuts by seeing how poorly this one has done. Shares closed down each day since the IPO… $16.87, $16.80, $16.03, and then ultimately at $14.75 just yesterday.
Now we have shares after more than 40 minutes down another 6% at $13.15 and the new trading low is listed as $13.04 today. That implies that Renren has become a busted-IPO
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