Renren (proposed RENN) is scheduling a $690 million IPO with a market capitalization of $5.1 billion at a price range mid-point of $13 for Wednesday Mary 4, 2011.

RED FLAG, MANAGEMENT & CONTROL SYSTEMS

RENN corrected its reported monthly unique log-in user increase for the March 2011 quarter compared to the December 2010 quarter; down to a 19% increase* from the 29% increase** reported nine days earlier

* S-1 April 27, page 19 http://www.sec.gov/Archives/edgar/data/1509223/000119312511111715/df1a.htm

** S-1, April 18, page 19 http://www.sec.gov/Archives/edgar/data/1509223/000119312511100985/df1a.htm

RED FLAG

. Investors have become skeptical of the purity & validity of financials coming from Chinese companies. Here’s a hot IPO that is already proving its management reporting and control system is flawed. . It’s hard to have full confidence in RENN’s ‘Adjusted net income (loss) figures on page 101 in the April 29 filing

http://www.sec.gov/Archives/edgar/data/1509223/000119312511100985/df1a.htm#toc129418_12

Therefor, it may be risky buying RENN in the IPO aftermarket.

FRIDAY UPDATE, April 29: Renren now plans to sell 53.1 million American Depositary Shares for $12 to $14 each, not $9 to $11 each. Price range mid-point up 30%. Valuation figures adjusted below.

CONCLUSION

Based in Beijing, China RENN sales were up 64% in 2010 to $77 million from $47 million in 2009.

RENN is hot & ‘in demand’ because it is touted as the FACEBOOK of China. So if you can get stock on the offering, do so. Yes, if RENN becomes the FACEBOOK of China all immediate IPO after market investors will be well rewarded.

On the other hand, it may be best to be cautious in the after market for several reasons.

(1) FACEBOOK was the absolute first mover in the social networking category, and it continues to capitalize on its first mover status, except in China where it is banned. There are several companies vying to be the FACEBOOK of China, which means none of them have the same first mover advantage that FACEDBOOK has, at least in the U.S.

(2) Looking at financial trends for RENN’s last three sequential quarters, we see an income statement that just does not reflect a growth company. For example . Total revenue was essentially flat, respectively $20 million, $22 million & $21 million . Social networking advertising was flat, respectively $9 million, $10 million and $9 million. . Operating income – for the past three quarters operating income was erratic, respectively $2.4 million, $3.9 million and $2.3 million

Quarterly results page 98, S-1 http://www.sec.gov/Archives/edgar/data/1509223/000119312511100985/df1a.htm#toc129418_12

VALUATION SUMMARY

Quarterly results	Sep-09	Dec 2009	March 2010	June 2010*	Sept, 2010	Dec, 2010
Revenues ($mm)	$14	$16	$14	$20	$22	$21
Gross margin %	79%	80%	75%	76%	81%	80%
Operating income	$11.1	$13.2	$10.5	$15.1	$17.6	$16.7
Operating margin % of rev	11%	-24%	-5%	11%	18%	11%
Warrant value change	-$44	-$6	-$11	-$29	$2.6	-$38
Net -- continuing operations	-$40	-$10	-$10	-$24	$8	-$34
Net income % of rev	-286%	-63%	-71%	-120%	36%	-162%
RENN adjusted net income
p101, April 29 S-1 filing	$4.6	-$3.1	$0.6	$5.2	$6.3	$5.1
Adj for estimated 25% tax rate	$3.45	-$2.33	$0.45	$3.90	$4.73	$3.83
Income % of revenue	25%	-15%	3%	20%	21%	18%
Valuation Ratios	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
6 mos ended Dec 31, 2010	Cap (mm)	Sales	Earnings*	BookValue	TangibleBV	in IPO
Renren	$5,135	59.7	299	4.8	4.7	13%
*P/E using RENE's adj numbers

Adjusted net income (loss) estimates are on page on page 101 in the April 29 S-1

http://www.sec.gov/Archives/edgar/data/1509223/000119312511117141/df1a.htm

THE GREAT FIREWALL OF CHINA

Due to the permanent blockage of other Social Networking Websites such as Myspace, Facebook, Twitter and Youtube since the summer of 2009, Chinese home-grown competition has flourished.

Kaixin001 cloned and brought the FACEBOOK applications to the Chinese Market before anyone else, and is a current competitor. Kaixin is gearing up for an IPO in the U.S. perhaps in 2011

Other top user sites include China’s biggest search engine Baidu (BIDU); Tencent Holdings Ltd.’s QQ.com, Sina Corp’s (SINA) Twitter like Weibo site; Alibaba’s Taobao.com, the ‘Amazon" of China, along with another ‘Amazon of China’ DangDang (DANG). All those companies would like to the FACEBOOK of China if they could. They all are heavily branded in their own sectors. Anyone of them could acquire the 3rd or 4th ‘FACEBOOK of China", rebrand it and become a viable competitor to RENN – unless RENN can acquire the competition first.

BUSINESS

. RENN operates the leading real name social networking internet platform in China as measured by total page views and total user time spent on social networking websites in February 2011, based on data issued in March 2011 by iResearch . Had 117 million activated users as of March 31, 2011.

USE OF PROCEEDS

$629 million to RENN from sale of 42.9million shares. Shareholders intend to sell 10.2 million shares

. US$180 million for investing in technology and research and development activities;

. US$180 million for expanding sales and marketing activities, including marketing programs on the internet, television, outdoor media and other formats to increase brand recognition, promote nuomi.com and jingwei.com, and promote games on our online games center . balance for other general corporate purposes, including potential strategic acquisitions and investments.

Renren (RENN)	RENN, C+, 8					Post ADS equivalents: 395mm
Social networking, games
Beijing, China		2008	2009	2010		IPO Mkt
Revenues ($mm)		$14	$47	$77	64%	Cap (mm)
Gross margin		59%	78%	78%		$5,135
Reported income (loss)		$49	-$70	-$64		@$13
Includes warrant value charges		$73	-$68	-$64
Quarterly results	Sep-09	Dec 2009	March 2010	June 2010*	Sept, 2010	Dec, 2010
Revenues ($mm)	$14	$16	$14	$20	$22	$21
Gross margin %	79%	80%	75%	76%	81%	80%
Operating income	$11.1	$13.2	$10.5	$15.1	$17.6	$16.7
Operating margin % of rev	11%	-24%	-5%	11%	18%	11%
Warrant value change	-$44	-$6	-$11	-$29	$2.6	-$38
Net -- continuing operations	-$40	-$10	-$10	-$24	$8	-$34
Net income % of rev	-286%	-63%	-71%	-120%	36%	-162%
RENN adjusted net income
p101, April 29 S-1 filing	$4.6	-$3.1	$0.6	$5.2	$6.3	$5.1
Adj for estimated 25% tax rate	$3.45	-$2.33	$0.45	$3.90	$4.73	$3.83
Income % of revenue	25%	-15%	3%	20%	21%	18%
Valuation Ratios	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
6 mos ended Dec 31, 2010	Cap (mm)	Sales	Earnings*	BookValue	TangibleBV	in IPO
Renren	$5,135	59.7	299	4.8	4.7	13%
*P/E using RENE's adj numbers
SCORECARD		Mgt	Market	Market Do-	Proprie-	Total
1-5, 5 is high			Growth	mination	tary	rating
20 is perfect		2	3	2	1	8