Renren struggles to arrest its decline

Renren Inc was touted as the Facebook Inc of China when it debuted in New York in 2011. Today it is looking more like online flameout Myspace.

The logo of Renren Inc at an exposition in Beijing. Renren was one of China's first social media websites, but it has been eclipsed by rivals including Tencent Holdings Ltd's WeChat and Weibo Corp, backed by Alibaba Group Holding Ltd. [Provided to China Daily]

The stock has lost more than three–quarters of its value since 2011 and will drop about 18 percent over the next 12 months to $2.74, according to the average estimate of analysts surveyed by Bloomberg—the most bearish forecast among companies in a Bloomberg index of Chinese stocks traded in the US.

Renren is struggling to diversify its business and boost profit as sales slide, even in a country with 632 million Internet users. The company forecast in August a plunge of as much as 54 percent in third-quarter revenue to $19 million, the smallest amount since at least 2011.

While Renren was one of China's first social media websites, it has been eclipsed by rivals including Tencent Holdings Ltd's WeChat and Weibo Corp, backed by Alibaba Group Holding Ltd, which have been faster to adapt to the rapidly changing social media industry.

"Renren was the first social media platform to go public and was expected to expand and grow, but failed to do so," said Cyrus Mewawalla, a managing director at CM Research in London.

"When a new messaging app like WeChat arrives, you have to come up with your own messaging app; when shopping goes mobile, you have to catch that trend.

"It's not giving enough variety of services to keep customers, and therefore the bigger ecosystems are going to eat its lunch."

Renren's Chief Executive Officer Joseph Chen said in August that its management team is addressing the erosion of its business model by pursuing a strategy that focuses on a younger audience in China.

The company posted its first quarterly profit in the three months ended June 30 after nine straight losses. On a conference call with investors, the company said it will diversify its offerings to include online financial business which will provide loans to students, Renren's core users.

Cynthia Liu, a spokeswoman for the Beijing-based company, declined to comment on the analysts' outlook on the stock and the company's business model. But Francis Gaskins, research director at financial media site Equities.com, said last week that a sale of the company is now looking likely.