China's Facebook basks in the glow

Technology - Tuesday, February, 07 2012FORTUNE -- Joseph Chen chuckles a bit when asked what the hype surrounding Facebook's announced plans for an initial public offering means for the company he founded and runs, Renren Inc., the so called "Facebook of China." He chuckles because the question is more complicated than it seems. In the week prior to Facebook's confirmation that it was, in fact, going public later this year, Renren's (RENN) stock (its ADRs trade on the NYSE) leapt by more than 60%. That had to come as a relief to Chen, because ever since it went public last May -- when the stock hit a peak of $24 just after it's IPO -- it s been on an escalator ride straight down, hitting a 52-week low of just $3.20 last month. The stock price plunge was the result of a perfect storm. There was, let's face it, a bit of hype surrounding its own IPO. When you put the words "Facebook" and "China" together in the same sentence, separated by the word "of," at least a percentage of the investing universe is going to buy first and ask questions later. After all, there are more Internet users in China than anywhere else, and social networking sites are still in their infancy. According to comScore Media Metrix, 38.4% of Internet users in China engage in social networking, compared to 69.8% globally and 81.4% in the United States. Clearly, there is huge room for growth here.

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