Why Renren Shares Rocketed Higher

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 Chinese social networking specialist Renren (NYSE: RENN  ) advanced more than 10% Friday morning after it was announced that it agreed to sell a 59% stake of its group-buying Nuomi subsidiary to search engine giant (NASDAQ: BIDU  ) for approximately $160 million.

So what: The deal is expected to close sometime in the fourth quarter, and confirms last week's report from the tech news outlet section of that Baidu was interested in acquiring the unprofitable daily deals site, and that negotiations between the two companies had been in progress for at least two months. At the time, the news drove shares of Renren up more than 12%.

Now what: On one hand, this is great for Renren, helping remove at least some of the burden of running the cash-burning Nuomi business. Shares of Baidu, on the other hand, fell slightly during Friday's trading as investors worried whether the company had paid too much for its stake, with the sale price valuing Nuomi at a premium of around 10 times sales.

However, if Baidu can use its deep pockets to ultimately turn Nuomi profitable, this could end up being a big win for both companies.

The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate and give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2607899, ~/Articles/ArticleHandler.aspx, 9/28/2016 6:13:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 12.84 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 4:00 PM
BIDU $187.74 Down -3.09 -1.62%
Baidu CAPS Rating: *****
RENN $1.94 Up +0.02 +1.04%
Renren CAPS Rating: *
SOHU $43.86 Up +0.25 +0.57% CAPS Rating: ***