If investors were hoping that Renren's (NYSE: RENN) latest quarterly report would be enough to get the Chinese social networking website back up to its IPO price of $14 -- or at the very least, return it to double digits -- they're out of luck.

The real-name network is growing quickly, but apparently not moving fast enough to justify its original $5.6 billion market cap, with the equivalent of roughly 400 million ADS outstanding.

Revenue in its latest quarter grew 53% to $30.4 million, fueled by a 94% surge in online advertising to $16.9 million. Web ads now make up more than half of Renren's revenue; the balance comprises online games, social commerce, and other value-added services.

The company's online advertising growth is impressive. Chinese online ad-sellers Baidu (Nasdaq: BIDU) and Sohu.com (Nasdaq: SOHU) didn't grow at that pace during the same period; their online ad revenue climbed 78% and 27%, respectively.

However, Renren's adjusted profit was more than halved to $2.3 million. Sure, Wall Street was settling for breakeven results on $29.5 million. One can also argue that Nuomi -- the social commerce initiative that Renren launched last summer -- is an early drag on performance. Back out Nuomi's costs and contributions, and adjusted net income actually grows by 23% during the quarter. However, it's not encouraging to see selling, marketing, and G&A costs grow twice as quickly as Renren's top line.

The market isn't happy with Renren's guidance for the current quarter. The company expects $33.5 million to $35.5 million in Q3 revenue. The 54% to 63% top-line spurt that this represents would translate into accelerating year-over-year growth, but analysts were already perched at the high end of that range with their target of $35.2 million.

They sure don't make China's dot-com darlings like they used to. Some of the past year's more ballyhooed IPOs in this sector -- video-streaming site Youku.com (NYSE: YOKU), online retailer Dangdang (NYSE: DANG), and Renren -- are either losing money or barely profitable.

Renren will get better. Once the scalable merits of its 124.2 million activated users kick in, margins will widen, and adjusted earnings will outpace top-line growth. As long as Renren doesn't yield the social networking crown to someone else, it will grow into a worthy dot-com darling.

Unfortunately, the company got cheated by its starting line. Baidu and SINA (Nasdaq: SINA) didn't go public as $5.6 billion companies. Sohu isn't even a $5.6 billion company now. Renren's shares will continue to drift lower until it finds a more reasonable valuation. Only then will Renren rise and fall based on its ongoing fundamentals. And we're not there yet.

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