Jefferies cuts Renren following Q4 guidance; firm sees problems continuing

|About: Renren Inc. (RENN)|By:, SA News Editor

Jefferies' Cynthia Meng has cut Renren (RENN -10.4%) to Underperform after the company provided dispiriting Q4 guidance to go with mixed Q3 results.

Meng doesn't see Renren's gaming ops (saw a 16.9% rev. drop in Q3, and will likely witness a bigger drop in Q4) rebounding in the near-term, given intense competition from Tencent and other firms with strong mobile game distribution. Renren has said it plans to focus on a smaller number of "high-quality" games" going forward.

Meng also questions Renren's ability to transition from being a social networking platform to a social messaging platform (the company just launched a mobile messaging app), given the popularity of incumbents such as Tencent's WeChat, and notes iResearch estimates Renren has respectively seen 55% and 38% Y/Y drops in monthly time spent and daily active users.

On the CC (transcript), Renren stated its ad sales (-11% Y/Y in Q3) were pressured by both the mobile transition and social networking competition, and that it plans to launch "a series of marketing campaigns" to promote its messaging app. The company also noted only ~10% of its Q4 ad revenue is expected to come from mobile.