Kaixin Looks to Cash in on Facebook Effect 开心网似乎在利用Facebook效应

By newsdoug on February 14, 2012

Kaixin, China’s second biggest social networking site (SNS), has just released some new data that finally allow us to make some comparisons with industry leader Renren (NYSE: RENN), in what looks like a carefully timed move to restart its stalled IPO process to take advantage of hype surrounding the upcoming IPO for global leader Facebook. Frankly speaking, the Kaixin numbers look ok, but hardly seem to offer the kind of buzz the company would need to launch a hot IPO, especially in the current climate that has many US investors wary of Chinese companies following a series of accounting scandals last year. According to the handful of numbers given out by Kaixin, the company’s revenue grew 41 percent last year to about $60 million, while its registered user based reached 130 million, 60 million of whom were active users. (English article; Chinese article) The revenue looks rather weak compared to Renren, whose third-quarter revenue grew 57 percent to $34 million, meaning Renren is still about twice as big as Kaixin in revenue terms. (Renren Q3 announcement) In terms of users, Renren had 137 million registered users at the end of the third quarter, including 38 million unique users logging in each month — figures that look similar but slightly stronger than Kaixin’s. What all this seems to say is that Kaixin and Renren are roughly equivalent in terms of their user numbers, but that Renren has been more successful at parlaying its big user base into actual revenue, posting both stronger revenue and revenue growth compared to Kaixin. Despite its industry leading position, Renren shares have struggled since their IPO last year. They now trade at less than half their IPO level, though they got a nice bump after news first emerged that Facebook was preparing to file for its long awaited IPO, and are up about 20 percent since then. Kaixin is no doubt noticing the Facebook effect, and I suspect the company is now quietly scrambling behind the scenes to prepare its IPO documents so it can make a new filing in the next few weeks. Kaixin didn’t say whether it is profitable in its latest comments, which tells me it probably is still losing money, similar to Renren. But after months of shunning China stocks, perhaps the market is finally ready for another China Internet story, and Kaixin is clearly hoping to be that story. At the end of the day I could see a semi-successful offering for Kaixin, which in this case could be an IPO of about $100 million that probably won’t rise too much on its trading debut but also shouldn’t fall too much.

Bottom line: Kaixin’s release of limited new financial data indicate it may soon restart its stalled IPO, hoping to seize on hype generated by Facebook’s upcoming offering.

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