Renren Inc. (NYSE: RENN) has been an absolutely brutal initial public offering. Since “The Facebook of China” came public it has only had one real positive trading session of its nine trading sessions so far. We have been very critical of this IPO, but even after a drop on Monday it is possible that the dust is settling here.
Our two largest criticisms about the company itself were that its growth was overstated as soon as a week before its IPO. Then the head of its audit committee resigned right before the IPO. What we really felt was the biggest issue of all was that the underwriters went ahead and jammed this out to the public because this was supposed to be “The Facebook of China.”
The formal 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. Anyone buying the first day got hosed. It went downhill from there.
Now that this is back down to $12.60, traders may start taking a look at the long-side here. This one was in free fall after its IPO. The low close was on last Thursday at $12.60 on a day when it hit an intraday low of $12.55. But Friday brought a close of $13.16 with a low of $12.00 that day. Even though Monday’s close was a drop, it also matched the $12.60 close and the intraday low was only $12.30.
The reality is that this IPO has been an absolute disaster. The only people who would try to argue against that are those who were somehow able to find a share borrow to get short. Still. money is money. Where this one ends up is a total coin toss on our end but it seems as though at least some traders and speculators are starting to take a shot here from the long end.
JON C. OGG
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