Filed under: Investing
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 Renren, plunged 11% Friday after the Chinese social networking specialist reported mixed quarterly results and weak forward guidance.
So what: Quarterly net revenue fell 5.6%, to $47.6 million, which translated to an adjusted net loss of $19.7 million, or $0.07 per ADS. By contrast, while analysts were expecting higher quarterly revenue of $48.26 million, Renren actually beat estimates that called for a larger adjusted net loss of $0.10 per ADS.
However, Renren also issued a dismal outlook for the fourth quarter, calling for revenue to fall to a range of $29 million to $31 million, or a 36% to 41% year-over-year decline. Analysts were modeling fourth-quarter revenue of $48.85 million.
Now what: CEO Joseph Chen explained, "While we continue to face short-term monetization challenges, our strategies are becoming more focused and clear."
To be sure, Renren did just launch a new "communication-oriented" mobile app in an effort to make their services stickier to younger users. What's more, Chen elaborated to say the restructuring of their gaming business should allow them to focus on creating higher-quality games going forward.
Even so, as long as Renren continues bleeding cash, and with no end in sight, I can't blame investors for taking a step back today. Until Renren can show it has what it takes to achieve sustained profitability over the long term, I'd prefer to stay on the sidelines.
Consider this solid stock pick instead
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!
The article Why Renren, Inc. Shares Dropped originally appeared on Fool.com.Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.