Renren Network (NYSE:RENN), the company that owns Renren.com, China’s imitation Facebook, has lost money again in Q1 of 2013. With its downfall since completing its IPO in 2011, many are now comparing China’s Facebook to, well, Facebook.
Renren.com is a remake of Facebook (Nasdaq:FB), which is banned in mainland China. The company, based in Beijing, was founded in 2005 by Joseph Chen, a graduate of Stanford Business School. In addition to Renren.com, its portfolio also includes Renren Games, Nuomi.com, which is similar to Groupon, and Jingwei.com, which is similar to Linkedin.
On May 14, Renren Network published its Q1 2013 results. According to 21cbh.com, a financial news website, the company's revenue increased 40.4 percent to $41.5 million. In the first quarter last year, the company’s net loss was $ 13.6 million, compared to $ 3.1 million this year. In 2012, the company lost $ 75 million, $ 21.1 million in Q4 alone.
In Q1 of this year, Renren was able to cut down its losses by selling all of its shares of VIP Shop (a shopping website that offers discounted brand name products), which it purchased at a low price earlier. These shares brought in $15.07 million.
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Just before its IPO, Renren’s future looked promising. By March of 2011, Renren.com boasted 117 million registered users, with an additional 2 million signing up each month. With these impressive numbers, along with comparisons of its portfolio of websites to successful Western websites, Renren was an easy sell for investors, 21cbh.com reports.
Renren completed its IPO on May 4, 2011, raising $ 584 million at $ 14 per share. At the height of its glory, Renren stock was as high as $24, making it the fourth-largest Internet company in China by market capitalization, after Tencent, Baidu and Alibaba.
Just half a year after its IPO, however, Renren’s share price began to fall. On Monday, it ended the day on the NYSE at $3.01, a drop of almost 80 percent from its IPO price. That's a lot worse performance than Facebook, whose shares began trading on the Nasdaq at $38 on May 18, 2012, and closed the day at $25.76 on Monday, a drop of 32 percent.