Renren Inc. (NYSE: RENN) operates a social networking service (SNS) business, used auto business and SaaS business. Renren’s American depositary shares, each of which represents fifteen Class A ordinary shares, trade on NYSE under the symbol “RENN.”
The company’ business and market profile leverage on its widespread presence in internet business (SnS) along with improving market share in used car sales platform. Looking ahead, the company will be serving global, vertical industries with internet and artificial intelligence.
Recent announcements:
- On January 28, 2019, Kaixin Auto Group (“Kaixin”), a leading premium used car dealership network in China owned by Renren, entered into a convertible loan agreement with Kunlun Tech Limited, a Hong Kong company owned by Beijing Kunlun Tech Co., Ltd., pursuant to which Kunlun has agreed to fund, subject to customary closing conditions, a $23 million convertible loan to Kaixin (the “Loan”), with interest payable at the rate stipulated by the People’s Bank of China. The first tranche of the Loan, in the amount of $20 million, was funded on January 28, 2019, and the remaining $3 million is to be funded on or before January 31, 2020.
- On Nov. 13, 2018, the company announced that Beijing Qianxiang Wangjing Technology Development Co., Ltd., a China-incorporated subsidiary wholly controlled by Renren, has agreed to sell all tangible and intangible assets in www.renren.com and its related business to Beijing Infinities Interactive Media Co., Ltd., for a cash consideration of US$20 million. Also, in consideration and as part of the foregoing asset sale, the Buyer, has agreed to issue to Renren shares of the Buyer Parent with a value of US$40 million based on an agreed-upon estimated valuation of the Buyer Parent at US$700 million.
Management Commentary: Renren is confident that an asset sale is the most viable path to dispose of its Renren SNS business and to set Renren onto its next phase of growth. With the consummation of this transaction, Renren will focus on its used car business in China, and its businesses outside China, notably the Trucker Path business and the SaaS business in the United States. Renren intends to remain listed on the NYSE.
About Kaixin Auto Group:
Founded in 2015 as a venture into China’s used car financing market by its corporate parent Renren Inc., Kaixin Auto Group is a leading premium used car dealership in China. Supported by the rapid growth of China’s used car market and leveraging its own hybrid business model that offers both strong online and offline presence, Kaixin has transformed from a tech-enabled financing platform into a nationwide dealer network that combines self-owned and affiliated dealers as well as value added and after-sale services.
About the company’ Social Networking Platform:
Renren, which means “everyone” in Chinese, enables users to connect and communicate with each other, share photos and access mobile live streaming. The community is highly engaged by university students and young white-collar professionals across the country. The Company’s SNS business started in 2005 under its prior name Xiaonei, which meant “On Campus,” synonymous to its initial roots within Universities.
Product and Services at a glance:
Key highlights of 3rd Quarter:
- Total net revenues for the second quarter of 2018 were US$135.0 million, representing a 582% increase from the corresponding period in 2017, due to the launch of the used auto retail business in the second quarter of 2017.
Used auto sales revenue was US$122.7 million. RENN initiated used auto sales business through one of its subsidiaries in the second quarter of 2017
Internet Value-Added Services (IVAS) and other net revenues were US$12.1 million, an 18.6% increase from the corresponding period in 2017
Financing income was US$0.2 million, a 97.4% decrease from the corresponding period in 2017
- Cost of revenues was US$129.6 million, compared to US$15.1 million from the corresponding period of 2017. The increase was primarily due to the cost of used auto sales.
- Net income attributable to the Company was US$166.1 million, compared to a net loss of US$17.2 million in the corresponding period in 2017. The improvement was primarily due to a US$180.8 million one-off gain recognized resulting from the transaction the Company announced on April 30, 2018.
Dividend declaration: The company declared a cash dividend of $0.6125/share or $9.1875/ADS to shareholders on record of June 14, 2018.
Outlook over the near to medium term: The Company expects to generate revenues in an amount ranging from US$123 million to US$128 million in the third quarter of 2018, representing a 104.3% to 112.6% year-over-year increase. This forecast reflects the Company’s current and preliminary view, which is subject to change.
Key risk factors and potential stock drivers:
- Company’ ability to ramp up operations while improving its capital structure and financial position would continue to remain a key stock sensitivity factor over the medium term.
- Exposure to intense competition leading to constrained profitability
- With ongoing losses, Renren’s remaining cash balance is restricted.
- Company’s ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements.
Stock Chart:
Comments:
- On Wednesday, March 6th, 2019, RENN closed at $1.61 (up by +1.91%), on an above average volume of 7.89 million shares exchanging hands. Market capitalization is $111.089 million. The current RSI is 55.62
- In the past 52 weeks, shares of RENN have traded as low as $1.27 and as high as $10.44
- At $1.61, shares of RENN are trading above its 50-day moving average (MA) at $1.57 and above its 200-day moving average (MA) at $1.62
- The present support and resistance levels for the stock are at $0.97 & $2.79 respectively.
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