Why Renren Shares Popped

Why Renren Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of social networking specialist Renren jumped more than 12% Tuesday following reports Chinese web search giant Baidu is interested in acquiring Renren's group-buying daily-deals Nuomi subsidiary (think of it as a Chinese version of Groupon). Shares of Baidu are also up more than 2% so far in today's trading.

So what: No specific price for Nuomi has been released, but according to a report from the tech news outlet section of Sohu.com, negotiations between the two companies have been in progress for around two months already and currently stand in the "due diligence phase."

Now what: Going forward, this could certainly be a win-win for both companies, but Renren arguably has much more to gain from unloading the site, especially when we remember the company has struggled to turn Nuomi profitable in the face of larger regional competitors including Lashou, Fantong, and Kaixin. Baidu, on the other hand, could potentially use its big name and deep pockets to propel Nuomi into the limelight. Remember, though, this is far from a done deal, so don't count out the possibility of an agreement falling through the cracks.

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The article Why Renren Shares Popped originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Baidu and Sohu.com. The Motley Fool owns shares of Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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