The first day on the market for Chinese social network company Renren was extraordinarily lucrative for traders who got a taste of these shares.
Renren (RENN, quote) jumped from a starting price of $14 as high as $24 today before settling for a “mere” 28% gain in its market debut.
Volume was extremely robust, with a total of 90 million shares changing hands by the end of the day.
Although some analysts warned that RENN was extremely richly valued — at something like 100 times sales, let alone profitability — lust for social networking plays on both sides of the Pacific remains intense enough to push traders into these shares.
The fact is, Facebook is just not available for any but the most affluent clients of banks like Goldman Sachs. And even then, its shares do not trade on the open market.
Money poured out of other Chinese Web stocks to make way for RENN shares.
Baidu (BIDU, quote) sank 0.59%, Sohu (SOHU, quote) fell 2.16% and Sina (SINA, quote) — often considered the leading contender to become a true “Chinese Facebook” — shed 2.83% of its value as shares in its competitor soared.