Wednesday, July 13, 2011

Ren Ren (RENN) Eventually There is a Valid Price for Everything

There were all sorts of warts on "Chinese Facebook" (not really) Ren Ren (RENN) when it came public.  [RenRen IPO Appetite Seen Huge, but Red Flags Abound]   This did not stop the investment bankers from gifting their best customers with shares that could be flipped to the public in the low to mid $20s on IPO day.  While a complete bust, breaking below its IPO price of $14 within a week or two [May 10, 2011: Thus Far RenRen a Bust]  While impossible to catch a falling knife, those who were genius enogh to buy at $6 could have made 100% in just under 2 weeks with a perfect entry and exit.  For the rest of us mere mortals, a nice opportunity to skim 20-30-40% in a very short period of time also existed.

A price around $8 to $10 was most likely far more reasonable to come IPO at, and without the hype of the first day pop, would have led to a far more stable course for the stock.  But the larger point is, there is a valid price point for everything - unfortunately, a lot of people learned that the hard way on this one.

No position

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