Wall Street has long expected that Facebook to go public this year, recent reports make it seem as if the company could file papers any day now week. With the Facebook IPO apparently just around the corner, there has been a frenzy of buying around anything social, with Chinese internet stocks getting a particularly big boost.
The buying started after reports that the company could file its papers as early as this Wednesday. Reports indicate that Facebook has chosen to go with NYSE instead of the NASDAQ as tech stocks generally do, and is expected to trade under the symbol FB.
As investors ready themselves for the most highly anticipated public offering this decade, they have started buying anything social related and including a big chunk of the Chinese internet space, which have seen some big price jumps.
One of the biggest gainers is RenRen (RENN), which is considered to be the Facebook of China. Shares of RENN jumped by over 15% Monday. RENN went public last year, but the stock never really took off as investors had soured a bit on Chinese social media. The chatter over the Facebook IPO has reignited interest in RENN and the stock has been moving higher since Friday.
This move continues recent strength that it has been enjoying since December when the stock traded as low as $3.21 a share. The company continues to lose money, and burn cash, but investors are becoming more optimistic about the company’s future. Before Monday’s move the stock was already up 63% from its December low.
There are reasons to get behind RENN, as more Chinese people get online and plug into social media, RENN is the social website that they are likely to join. Traders are hopeful that when Facebook makes its financials public that it will provide a better picture of how much money there is to be made through social media sites, giving RENN even more upside.
Can RENN maintain this strength and continue to trade higher? A big determining factor will be this afternoon’s earnings report from Chinese search portal Baidu.com (BIDU). BIDU is expected to report strong earnings this afternoon, and if it can outpace analyst estimates we will almost certainly see big moves for all Chinese tech stocks.
RenRen has a long way to go before it can start to turn a profit, but there are reasons to be hopeful, and that is exactly what Monday’s action signifies.