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China internet stocks fall before Renren’s IPO in NY
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Chinese Internet companies have been falling in U.S. trading some hours before the impending IPO by by Renren. Investors and analysts are afraid of a China tech bubble. They are worried that the new listing by China’s biggest social-networking website may be overstated and evaluated. Renren is seeking a valuation more than double that of Facebook in its initial public offering, trying to raise as much as 743.4 million US dollars. The US investors also fear ttat this IPO could ”dillute the market by allowing the company to expand” and compete too much with american companies such as facebook.
. Sina dropped 9.5 percent at the close of trading at in New York, its biggest drop since February 2009.
. Baidu has slid 5.2 percent.
. Sohu.com and NetEase.com also tumbled the most in some 17 months.
These moves come 1 day after Renren replaced its Audit Committee Chair and denied rumours of bad info in its IPO prospectus.
Derek Palaschuk, the CFO of China-based Longtop Financial Technologies, has now formally resigned from Renren’s board of directors. The financial analysts and journalists believe that Renren is trying to protect itself from the fall-out of an accounting controversy at Longtop which sent the firm’s shares plummeting last week. The Chinese social network forgot to provide info about censorship issues in China and overstated some stats about its past activites.
The RenRen’s IPO which was expected to price Tuesday night and begin trading on the New York Stock Exchange Wednesday, has been pushed back one day, according to Reuters
SOURCES: Crienglish, Xhinua (4/5/2011)
IN THE PRESS:
. China Internet Stocks Tumble Before Renren’s U.S. Share Sale (Bloomberg, 4/5/2011)
. ‘Facebook of China’ Renren’s IPO Pricing Delayed Until Wednesday: Reuters (Forbes / Reuters, 4/5/2011)
