Renren (RENN) Doesn't Think Ads, Games Will Drive Growth, Has Other Plans...
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Renren Inc. (Nasdaq: RENN) shares are making up ground this morning after starting out lower following second-quarter results.
The largest social-networking platform in China reported breakeven earnings on $30.4 million in revs, just about inline with consensus views. Looking to the third quarter, Renren sees revs of $33.5 to $35.5 million, even with the $35.2 million consensus.
Though its billed as a social-networking site, a report from the Financial Times Friday suggests Renren CEO Joseph Chen thinks e-Commerce will trump ads or games in driving growth moving forward.
Chen sees 50 percent of active users paying Renren over the long-term, leading to a majority of its revenue coming from e-Commerce.
Renren has been pouring money into its Nuomi group buying unit, a move that contributed to the doubling of operating expenses last quarter. In the second quarter, Nuomi reported just $1.1 million in revenue, compared with $16.9 million and $10.2 million of revs from advertising and gaming, respectively.
Renren CFO Huang Hui said commissions Nuomi can ask from businesses it does deals with has stabilized at just 5 percent, compared with the 50 percent Groupon demands in the U.S. But Renren said it will continue to direct funds to the expansion of Nuomi, which is now beginning to gain market share. Renren sees competitors closing down or consolidating in the future as Nuomi continues to gain share.
According to FT, users in China are flocking more and more to Twitter-like social networking sites rather than sticking with traditional, real-name Facebook-like sites. Chen said there are limits to potential growth in this market, but higher barriers to entry for competitors. Renren reported active users increased 28.3 percent to 124.2 million at the end of June.
Aside from e-Commerce, Chen believes Renren will also be able to capitalize on online video hosting, though China's current censorship laws make it a secondary objective.
Renren is about 2.8 percent better Friday morning after opening down about 3.9 percent.
The largest social-networking platform in China reported breakeven earnings on $30.4 million in revs, just about inline with consensus views. Looking to the third quarter, Renren sees revs of $33.5 to $35.5 million, even with the $35.2 million consensus.
Though its billed as a social-networking site, a report from the Financial Times Friday suggests Renren CEO Joseph Chen thinks e-Commerce will trump ads or games in driving growth moving forward.
Chen sees 50 percent of active users paying Renren over the long-term, leading to a majority of its revenue coming from e-Commerce.
Renren has been pouring money into its Nuomi group buying unit, a move that contributed to the doubling of operating expenses last quarter. In the second quarter, Nuomi reported just $1.1 million in revenue, compared with $16.9 million and $10.2 million of revs from advertising and gaming, respectively.
Renren CFO Huang Hui said commissions Nuomi can ask from businesses it does deals with has stabilized at just 5 percent, compared with the 50 percent Groupon demands in the U.S. But Renren said it will continue to direct funds to the expansion of Nuomi, which is now beginning to gain market share. Renren sees competitors closing down or consolidating in the future as Nuomi continues to gain share.
According to FT, users in China are flocking more and more to Twitter-like social networking sites rather than sticking with traditional, real-name Facebook-like sites. Chen said there are limits to potential growth in this market, but higher barriers to entry for competitors. Renren reported active users increased 28.3 percent to 124.2 million at the end of June.
Aside from e-Commerce, Chen believes Renren will also be able to capitalize on online video hosting, though China's current censorship laws make it a secondary objective.
Renren is about 2.8 percent better Friday morning after opening down about 3.9 percent.
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