With 2011 nearly in the books, it's time to reflect on what has transpired this year and which companies could be facing business-altering decisions in 2012. On today's plate we have the Chinese equivalent of Facebook, Renren (NYSE: RENN).

But before we dig too deeply into what 2012 may have to offer, let's get a quick snapshot of how 2011 treated shareholders:

Year-to-Date Stock Return (81.7%)*
Price-to-Earnings (TTM) NM
Price-to-Sales (TTM) 15.6
Cash/Debt $380 million / $0
Projected 5-Year Growth Rate 2%
Forward P/E NM

Source: Yahoo! Finance. TTM = trailing 12 months. NM= not meaningful. *Return since close on first day of trading.

Dubbed as potentially one of the worst IPOs of 2011, Renren represents one of the many Internet-based IPOs that briefly spiked higher following its debut but lost its traction shortly thereafter due to a lack of real results. Prior to Renren, only Latin America's Quepasa (AMEX: QPSA) offered a glimpse into the profit potential of a social media website. As for shareholders, even after nearly eight months of the stock being publicly traded, profits are still elusive. After a whopping $700,000 in profits in the second quarter, the company returned to its money-losing ways last quarter.

What to expect
I think it would be foolish (with a small "f") to expect anything different from Renren in 2012. The company is going to focus on marketing itself in China and continuing to build its market share from an Internet and mobile perspective.

During the third quarter, Renren purchased 56.com and will likely use the proceeds from its IPO to make other purchases to enhance its brand. In addition, Renren is expected to use some of its $380 million in cash to further advance its online gaming division, which showed a 23.6% increase in revenue last quarter.

Growth has never been the issue with Renren. According to estimates on Yahoo! Finance, Renren is expected to grow revenue by 50% in 2012. The concern has always been whether or not Renren can keep costs under control and actually turn a net profit. Back in 2000, sales for Internet-based companies were going through the roof -- unfortunately, costs were moving higher at an even faster rate and many wound up bankrupt. I'm not saying Renren has that same issue, but with operating expenses having risen 91.5% in the third quarter (excluding an $8.1 million one-time cost to launch its social commerce service Nuomi), it's clear that Renren isn't going to be able to turn a significant profit anytime soon, which should clearly temper the expectations of its shareholders.

The other worry with Renren is that despite its rapid growth rate, it may not be able to carve out a sizable enough niche to really compete worldwide against Google (Nasdaq: GOOG) with Google +, Facebook, News Corp. (Nasdaq: NWSA) with MySpace, or the countless dozens of social media websites popping up weekly in its home market of China, where it's currently focusing operations. Having to use a significant amount of its precious capital to defend its market share could wind up eating up that $1.2 billion in cash before the company is operationally profitable.

Foolish roundup
As I've said before, I'm more than willing to give Renren a closer look when the company can turn a sizable profit. The company can continue growing like wildfire, but without controlling its expenses, these quarterly losses are only going to fuel the ire of shareholders who have already suffered through huge losses this year.

What are your thoughts on Renren heading into 2012? Share them in the comments section below and consider adding Renren to your free and personalized watchlist to keep track of the latest news on the company.

Also, if you're looking for one more great idea heading into the new year, consider downloading a copy of our latest special report, "The Motley Fool's Top Stock for 2012," in which our top-notch team of analysts highlights a company dubbed the "Costco of Latin America."