Renren Inc (RENN): 4 Reasons To Consider Buying This Chinese Internet Stock

Short Have Covered

About a year ago, short interest in Renren Inc (NYSE:RENN) stood at more than 24 million shares. Without question, the shorts have been right on Renren as shares have moved sharply lower. However, what is worth noting is the fact that shorts have aggressively covered. Currently, short interest in Renren stands at just 3.9 million shares. The profit taking on behalf of short sellers may indicate that the worst is over for Renren. In other words, shorts do not appear to be expecting another major move down.

Possible Takeover

Given Renren’s strong user base I think it is fair to say that Renren is a possible takeover target. This is especially interesting given the recent acquisition spree by large Chinese internet companies. Renren Inc (NYSE:RENN) would be a good fit for either Baidu or Alibaba, the two most dominant Chinese internet companies.

Conclusion

Due to the building momentum in Chinese internet stocks, recent options activity, low valuation per user relative to Facebook, recent short covering, and possibility of a takeover, it is time to buy Renren Inc (NYSE:RENN).

Sammy Pollack has no position in any stocks mentioned. The Motley Fool recommends Facebook and SINA . The Motley Fool owns shares of Facebook.

The article 4 Reasons To Consider Buying This Chinese Internet Stock originally appeared on Fool.com.

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