“The good news is that more people are joining up. Total users climbed 25% to over 172 million. Monthly unique log-in users also reached 48 million in the month of September, representing 27% growth year-over-year. Renren currently has a market capitalization of $1.29 billion, with a gross ttm profit of $91 million based on $160 million of revenue. … Total cash is $892.49 million, or a massive $2.37 per share. Debt is zero. This is after the company bought a student loan company in San Fransisco for $49 billion. If you net out the cash, this company is valued at $1.06 per share. This is cheap given its growth rate, and it limits the downside to about a third.
“There are three basic scenarios. Wall Street rediscovers Chinese Internet companies like Renren based on a Chinese rebound, in which case this stock goes back above $10 in a matter of months. Facebook, for example, has doubled in the past four months after being written off for dead. A second scenario is that Renren gets a handle on the mobile advertising, its gaming and U.S. student loan business continue to grow, and advertisers expand their budgets. Renren goes up on organic growth. Some of the biggest share price moves come when a company goes from losing money to making money quarter to quarter.
“The third scenario is that Facebook/Google/Microsoft/Apple buys Renren for instant access to the Chinese market. The risk is that China is hit with a political situation that shuts down Renren. But Renren is already so cheap, the political situation is more than priced in. Renren users use their real names; think LinkedIn rather than Twitter. Accountability coupled with rejuvenated Chinese growth should keep politics on the back burner. The chart shows solid support at $3. The balance sheet couldn’t be better. The growth prospect is there and easily understandable. This stock is overdue for a run. Buy Renren, Inc. (RENN) under $3.50. Put your stop in at $2.92. Two-year price target: $12.”