Renren Loss Widens, Outlook Weak; Stock Down - Update

(RTTNews) - Chinese online social networking site Renren Inc. (RENN) Wednesday reported a wider loss for the third quarter, hurt by lower revenue and margins. Online gaming revenue suffered as its games attained saturation, and advertising business slumped due to migration of traffic from PC to mobile coupled with intense competition. The results fell short of Wall Street estimates.

The company also provided a weak revenue guidance for the fourth quarter, sending its shares down about 10 percent in after-hours trade on the Nasdaq.

"While we continue to face short-term monetization challenges, our strategies are becoming more focused and clear," said CEO Joseph Chen. He said the company is focusing on developing high quality games and is restructuring its overall gaming segment.

Chen also said the recent launch of communication-oriented Renren mobile app tailored for the young generation will help strengthen its dominance in this demographic.

For the third quarter, Beijing, China-based Renren posted quarterly net loss of $24.6 million or $.07 per American Depositary Share, or ADS. This compares with a net loss of $15.4 million or $0.04 per ADS last year.

Excluding items, adjusted loss for the quarter was $19.7 million, compared with $12 million a year ago.

On average, four analysts polled by Thomson Reuters estimated a loss of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter slid to $47.56 million from $50.37 million last year. Analysts expected revenue of $48.29 million.

Online game revenue slid about 17 percent year-over-year and advertising revenue fell 11 percent.

The number of activated users on Renren.com were higher by about 30 million at 200 million.

Results were further hurt by operating expenses that climbed 27 percent to $66 million, on higher selling, research, and general costs.

Renren stock closed Wednesday at $3.35, up $0.03 or 0.90%, on a volume of 3 million shares. In after hours, the stock dropped $0.32 or 9.55% at $3.03. In the past year, the stock has traded in the range of $2.52 - $4.63.