Renren Inc., the operator of a real-name social networking website in China, sank to the lowest level in six months after U.S. online games developer Zynga Inc. and social network Facebook Inc. fell.
American depositary receipts of Beijing-based Renren tumbled 5.1 percent to $3.9 in New York, the lowest level since Jan. 13. They earlier lost as much as 8 percent to $3.78.
Zynga, the biggest developer of games played on Facebook’s social network, sank 37 percent to $3.18, the biggest drop since its December initial public offering, after missing analysts’ second-quarter revenue and profit estimates. Facebook slumped 8.5 percent before second-quarter results showed operating margin narrowed from a year earlier. Facebook’s shares slid in after-market trading.
Renren fell “in sympathy with Facebook on concern that their games revenues are unstable,” Andy Yeung, a New York-based analyst for Oppenheimer & Co., said by phone. Investors also need to see “how quickly the Chinese social media can monetize their user traffic in advertising dollars as a lot of users are migrating from desktops to smartphones.”
Renren is scheduled to report its second-quarter results on Aug. 7 after U.S. markets close. Sales will rise 39 percent from a year earlier to $42.3 million, from a 56 percent increase in the prior three months, according to the average forecast of six analysts surveyed by Bloomberg.
Yeung lowered his estimate for Renren’s second-quarter revenue by $2.4 million to $42 million as “their advertising sales may be pretty weak in the quarter given the current economic slowdown and increased competition from other social media,” he said. “That will be partly offset by the strength from the gaming side as they launched some in-house games last quarter.”
Renren had 154.2 million active users by the end of the first quarter, it said in a May 14 statement. Facebook said it had 955 million active users as of June 30.