Russian Social Network Looks to Follow Yandex, Renren to Market

Includes: RENN, YNDX
by: Emerging Money

By Tim Seymour

While Facebook is evolving into a global machine, the regional social networks may do better in emerging markets where they can build on truly local appeal.

A place like Russia is a great example. VKontakte, the biggest social networking site in Russia, is reportedly in the early stages of setting up an initial public offering of stock on the U.S. market.

If so, the process will be complex and slow — simply aligning the accounting standards to allow an emerging markets company to list in the United States can take months, so do not expect an IPO here before early 2012.

At that point, the emerging markets buzz that drove shares of Chinese social network Renren (NYSE:RENN) and Russian search engine Yandex (NASDAQ:YNDX) higher on their market debuts could be done.

But the underlying growth story should remain intact. Social networks by definition are local, which gives local vendors an edge when it comes to thwarting competition from global players like Facebook.

A place like Russia is a great example, and besides, Russian Internet incubator already owns a piece of both Facebook and VKontakte.

Either way, more attention on the Russian Internet story is good. We always knew these guys were running Silicon Valley!

Meanwhile, those high-flying emerging Web IPOs are now trading at much lower levels. YNDX has fallen 11% since it hit the market May 24, while RENN has plunged 53% from its May 4 debut: