IPO: The Hottest IPO Of 2011?
The Dynamic Wealth Report
April 25, 2011
by Robert Morris, Editor
Open your calendar and draw a big red circle around next Wednesday, May
4th. That's the day we just might see the hottest IPO of the year.
If you're thinking Facebook, you'd be wrong. But you wouldn't be too far
off. It will be the world's first IPO of the wildly popular social
networking websites.
I'm talking about Chinese social networking website, Renren.com.
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Renren, which means "Everyone Network", is considered by many as
China's version of Facebook. Thanks to the lack of anti-piracy laws in
China, Renren is able to copy Facebook in nearly every detail... even
down to the universally recognized blue and white color scheme.
According to iResearch, Renren is the leading 'real-name' social
networking site in China.
They have over 117 million activated users sharing information and
content, playing online games, listening to music, and shopping for
deals. And the site dominates China's real name social networking niche
on total page views, total number of visits, and total user time.
This is very important. Remember, sites garnering the most eyeballs are
best positioned to generate steady, fast-growing revenue and profit
streams.
There are several other social networking sites in China to be sure. But
most of them allow members to use aliases or virtual identities. With
most users now preferring real name sites, Renren is in pole position to
dominate China's social networking space.
How does the company make money?
Renren makes money from online games and online advertising. Last year,
revenues surged 64% to a cool $32 million. And after posting an
operating loss of $2.2 million in 2009, the company posted operating
income of $7.7 million in 2010.
Renren's IPO is sure to be a wild and crazy ride...
Investors have been salivating over the rumored Facebook IPO for months. Everyone wants a piece of the world's biggest social networking site. At
last count, Facebook had over 600 million activated users worldwide.
And many experts estimate Facebook is worth an eye-popping $70 billion.
While Renren is smaller than Facebook right now, it has the advantage by
being the first social networking site on the planet to go public.
By launching next week, they're getting the drop on every other Chinese
social networking site. And more importantly, they're beating Facebook,
Twitter, and LinkedIn to the punch.
In other words, Renren will be investors' first opportunity to grab a
piece of the exploding social networking industry. And as the first
social networking site to go public, Renren is almost certainly going to
see heavy investor interest.
And that's not all...
Renren also has another ace up their sleeve.
They won't have to compete with Facebook in China. You see, Facebook is
banned by the Chinese government from operating in the country. A status
that isn't likely to change anytime soon.
The Chinese have watched how Facebook has played a big part in the
uprisings sweeping the Middle East. And they definitely don't want Facebook stirring up unrest in China.
While I don't usually buy shares on the IPO, this one might be the rare
exception. Renren could be one of the few IPOs that soars on the first
day of trading and never looks back. Given the rabid enthusiasm for
social networking sites, Renren just might be worth a gamble on opening
day.
• Travel & Tourism (+17%)
Travel and Tourism stocks have been surging higher over the past month. Business travel has picked up in a big way. And increasing consumer
confidence is helping the leisure travel business. Companies like
Travelzoo (TZOO), Ctrip (CTRP),
MakeMyTrip (MMYT), and priceline
(PCLN) are leading the charge.
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