Why Renren Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of social networking specialist Renren (NYSE: RENN  ) jumped more than 12% Tuesday following reports Chinese web search giant Baidu (NASDAQ: BIDU  ) is interested in acquiring Renren's group-buying daily-deals Nuomi subsidiary (think of it as a Chinese version of Groupon). Shares of Baidu are also up more than 2% so far in today's trading.

So what: No specific price for Nuomi has been released, but according to a report from the tech news outlet section of Sohu.com, negotiations between the two companies have been in progress for around two months already and currently stand in the "due diligence phase."

Now what: Going forward, this could certainly be a win-win for both companies, but Renren arguably has much more to gain from unloading the site, especially when we remember the company has struggled to turn Nuomi profitable in the face of larger regional competitors including Lashou, Fantong, and Kaixin. Baidu, on the other hand, could potentially use its big name and deep pockets to propel Nuomi into the limelight. Remember, though, this is far from a done deal, so don't count out the possibility of an agreement falling through the cracks.

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  • Report this Comment On August 13, 2013, at 5:07 PM, Agoldst228 wrote:

    thanks for the information. I have been looking for news about why the 15% rise in the stock Now I have it.

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