Renren Leads Internet Slide on Profit Concern: China Overnight
November 03, 2011, 5:15 PM EDT
businessweek.com
By Belinda Cao
Nov. 4 (Bloomberg) -- Renren Inc., the Chinese social- networking site that completed an $855 million initial public offering in May, dropped to a four-week low, leading declines among Internet stocks in the Bloomberg China-US 55 Index.
Renren’s American depositary receipts fell 7.5 percent to $5.70 after losing as much as 14 percent to the lowest intraday level since Oct. 7. Analysts surveyed by Bloomberg forecast the company may report declines in profit for the third quarter. Online video sharing company Youku.com Inc. and Qihoo 360 Technology Co., developer of China’s most-popular computer security software, also fell.
The Bloomberg benchmark measure for the 55 most-traded U.S.-listed Chinese equities, which had gained 34 percent in 2010, fell as much as 14 percent this year to a low on Oct. 3, pushed by investor concerns about transparency and accounting irregularities at some smaller companies. The gauge has lost 2.7 percent this year compared with a 0.8 percent decline in the Standard & Poor’s 500 Index. The Bloomberg China index fell 0.7 percent to 101.74 at 12:44 p.m. in New York.
“Investors are not optimistic about Renren’s profit growth in the next several quarters,” said Echo He, a senior China analysts at Maxim Group LLC in New York. “The company has high costs for both research and marketing, as it focuses on growth instead of profit-making at the current stage.”
The Beijing-based company said it will report third-quarter financial results on Nov. 10 after trading closes in the U.S. Renren’s net earnings was 0.7 cents a share for the three months ended in September and the company will incur a net loss for the fourth quarter, according to the mean estimate of seven analysts in the survey.
Youku.com fell 3.5 percent to $20.03 and Qihoo retreated as much as 7.6 percent to a three-week intraday low of $16.75.
--Editors: Marie-France Han, Joshua Fellman
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 at papadopoulos@bloomberg.net |
