Intrinsic value of Renren Cl A ADR - RENN

Previous Close

$9.08

  Intrinsic Value

$2.71

stock screener

  Rating & Target

str. sell

-70%

Previous close

$9.08

 
Intrinsic value

$2.71

 
Up/down potential

-70%

 
Rating

str. sell

We calculate the intrinsic value of RENN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  53.66
  57.10
  51.89
  47.20
  42.98
  39.18
  35.76
  32.69
  29.92
  27.43
  25.18
  23.17
  21.35
  19.71
  18.24
  16.92
  15.73
  14.65
  13.69
  12.82
  12.04
  11.33
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.45
Revenue, $m
  63
  99
  150
  221
  316
  440
  598
  793
  1,031
  1,313
  1,644
  2,025
  2,457
  2,942
  3,478
  4,067
  4,706
  5,396
  6,135
  6,921
  7,755
  8,633
  9,557
  10,525
  11,538
  12,594
  13,695
  14,841
  16,032
  17,271
  18,558
Variable operating expenses, $m
 
  365
  554
  815
  1,165
  1,622
  2,202
  2,922
  3,796
  4,837
  6,055
  7,458
  9,050
  10,834
  12,811
  14,978
  17,334
  19,874
  22,595
  25,491
  28,560
  31,797
  35,199
  38,765
  42,494
  46,384
  50,438
  54,658
  59,047
  63,609
  68,351
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  239
  365
  554
  815
  1,165
  1,622
  2,202
  2,922
  3,796
  4,837
  6,055
  7,458
  9,050
  10,834
  12,811
  14,978
  17,334
  19,874
  22,595
  25,491
  28,560
  31,797
  35,199
  38,765
  42,494
  46,384
  50,438
  54,658
  59,047
  63,609
  68,351
Operating income, $m
  -175
  -266
  -403
  -594
  -849
  -1,182
  -1,604
  -2,128
  -2,765
  -3,524
  -4,411
  -5,433
  -6,593
  -7,893
  -9,333
  -10,911
  -12,628
  -14,478
  -16,460
  -18,570
  -20,805
  -23,164
  -25,642
  -28,240
  -30,956
  -33,790
  -36,744
  -39,818
  -43,015
  -46,338
  -49,792
EBITDA, $m
  -172
  -261
  -396
  -583
  -834
  -1,161
  -1,576
  -2,091
  -2,716
  -3,461
  -4,333
  -5,337
  -6,476
  -7,753
  -9,167
  -10,718
  -12,403
  -14,221
  -16,168
  -18,240
  -20,436
  -22,752
  -25,187
  -27,739
  -30,406
  -33,190
  -36,091
  -39,111
  -42,251
  -45,516
  -48,909
Interest expense (income), $m
  0
  5
  14
  25
  41
  62
  90
  126
  170
  223
  287
  361
  446
  544
  653
  773
  905
  1,049
  1,204
  1,370
  1,547
  1,734
  1,932
  2,139
  2,357
  2,584
  2,822
  3,069
  3,327
  3,594
  3,873
Earnings before tax, $m
  -173
  -271
  -417
  -619
  -890
  -1,244
  -1,694
  -2,254
  -2,935
  -3,747
  -4,698
  -5,794
  -7,039
  -8,436
  -9,985
  -11,685
  -13,533
  -15,527
  -17,664
  -19,940
  -22,352
  -24,898
  -27,574
  -30,379
  -33,313
  -36,375
  -39,565
  -42,887
  -46,341
  -49,933
  -53,665
Tax expense, $m
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -185
  -271
  -417
  -619
  -890
  -1,244
  -1,694
  -2,254
  -2,935
  -3,747
  -4,698
  -5,794
  -7,039
  -8,436
  -9,985
  -11,685
  -13,533
  -15,527
  -17,664
  -19,940
  -22,352
  -24,898
  -27,574
  -30,379
  -33,313
  -36,375
  -39,565
  -42,887
  -46,341
  -49,933
  -53,665

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  80
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,177
  1,736
  2,637
  3,882
  5,551
  7,726
  10,489
  13,918
  18,082
  23,041
  28,844
  35,526
  43,110
  51,609
  61,024
  71,349
  82,570
  94,670
  107,629
  121,427
  136,044
  151,464
  167,672
  184,658
  202,418
  220,951
  240,262
  260,363
  281,269
  303,002
  325,587
Adjusted assets (=assets-cash), $m
  1,097
  1,736
  2,637
  3,882
  5,551
  7,726
  10,489
  13,918
  18,082
  23,041
  28,844
  35,526
  43,110
  51,609
  61,024
  71,349
  82,570
  94,670
  107,629
  121,427
  136,044
  151,464
  167,672
  184,658
  202,418
  220,951
  240,262
  260,363
  281,269
  303,002
  325,587
Revenue / Adjusted assets
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
Average production assets, $m
  32
  49
  75
  111
  158
  220
  299
  397
  515
  657
  822
  1,012
  1,229
  1,471
  1,739
  2,033
  2,353
  2,698
  3,067
  3,461
  3,877
  4,317
  4,779
  5,263
  5,769
  6,297
  6,847
  7,420
  8,016
  8,636
  9,279
Working capital, $m
  181
  49
  75
  111
  158
  220
  299
  397
  515
  657
  822
  1,012
  1,229
  1,471
  1,739
  2,033
  2,353
  2,698
  3,067
  3,461
  3,877
  4,317
  4,779
  5,263
  5,769
  6,297
  6,847
  7,420
  8,016
  8,636
  9,279
Total debt, $m
  193
  390
  719
  1,175
  1,786
  2,582
  3,593
  4,848
  6,372
  8,187
  10,311
  12,756
  15,532
  18,643
  22,089
  25,868
  29,975
  34,403
  39,146
  44,196
  49,546
  55,190
  61,122
  67,339
  73,839
  80,622
  87,690
  95,047
  102,698
  110,653
  118,919
Total liabilities, $m
  438
  636
  965
  1,421
  2,032
  2,828
  3,839
  5,094
  6,618
  8,433
  10,557
  13,002
  15,778
  18,889
  22,335
  26,114
  30,221
  34,649
  39,392
  44,442
  49,792
  55,436
  61,368
  67,585
  74,085
  80,868
  87,936
  95,293
  102,944
  110,899
  119,165
Total equity, $m
  738
  1,101
  1,672
  2,461
  3,519
  4,898
  6,650
  8,824
  11,464
  14,608
  18,287
  22,523
  27,332
  32,720
  38,689
  45,235
  52,349
  60,021
  68,237
  76,985
  86,252
  96,028
  106,304
  117,073
  128,333
  140,083
  152,326
  165,070
  178,325
  192,103
  206,422
Total liabilities and equity, $m
  1,176
  1,737
  2,637
  3,882
  5,551
  7,726
  10,489
  13,918
  18,082
  23,041
  28,844
  35,525
  43,110
  51,609
  61,024
  71,349
  82,570
  94,670
  107,629
  121,427
  136,044
  151,464
  167,672
  184,658
  202,418
  220,951
  240,262
  260,363
  281,269
  303,002
  325,587
Debt-to-equity ratio
  0.262
  0.350
  0.430
  0.480
  0.510
  0.530
  0.540
  0.550
  0.560
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
Adjusted equity ratio
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -185
  -271
  -417
  -619
  -890
  -1,244
  -1,694
  -2,254
  -2,935
  -3,747
  -4,698
  -5,794
  -7,039
  -8,436
  -9,985
  -11,685
  -13,533
  -15,527
  -17,664
  -19,940
  -22,352
  -24,898
  -27,574
  -30,379
  -33,313
  -36,375
  -39,565
  -42,887
  -46,341
  -49,933
  -53,665
Depreciation, amort., depletion, $m
  3
  5
  7
  11
  15
  21
  28
  38
  49
  63
  78
  96
  117
  140
  166
  194
  224
  257
  292
  330
  369
  411
  455
  501
  549
  600
  652
  707
  763
  822
  884
Funds from operations, $m
  10
  -266
  -410
  -608
  -875
  -1,223
  -1,666
  -2,216
  -2,886
  -3,684
  -4,619
  -5,697
  -6,922
  -8,296
  -9,819
  -11,491
  -13,309
  -15,270
  -17,372
  -19,610
  -21,983
  -24,487
  -27,119
  -29,878
  -32,763
  -35,775
  -38,913
  -42,180
  -45,578
  -49,110
  -52,782
Change in working capital, $m
  21
  18
  26
  35
  48
  62
  79
  98
  119
  141
  165
  190
  216
  242
  268
  294
  320
  345
  369
  393
  417
  439
  462
  484
  506
  528
  550
  573
  596
  619
  644
Cash from operations, $m
  -11
  -284
  -435
  -644
  -923
  -1,285
  -1,745
  -2,314
  -3,005
  -3,825
  -4,785
  -5,888
  -7,139
  -8,538
  -10,088
  -11,785
  -13,629
  -15,615
  -17,741
  -20,004
  -22,400
  -24,926
  -27,581
  -30,362
  -33,270
  -36,303
  -39,464
  -42,753
  -46,174
  -49,730
  -53,425
Maintenance CAPEX, $m
  0
  -3
  -5
  -7
  -11
  -15
  -21
  -28
  -38
  -49
  -63
  -78
  -96
  -117
  -140
  -166
  -194
  -224
  -257
  -292
  -330
  -369
  -411
  -455
  -501
  -549
  -600
  -652
  -707
  -763
  -822
New CAPEX, $m
  0
  -18
  -26
  -35
  -48
  -62
  -79
  -98
  -119
  -141
  -165
  -190
  -216
  -242
  -268
  -294
  -320
  -345
  -369
  -393
  -417
  -439
  -462
  -484
  -506
  -528
  -550
  -573
  -596
  -619
  -644
Cash from investing activities, $m
  -193
  -21
  -31
  -42
  -59
  -77
  -100
  -126
  -157
  -190
  -228
  -268
  -312
  -359
  -408
  -460
  -514
  -569
  -626
  -685
  -747
  -808
  -873
  -939
  -1,007
  -1,077
  -1,150
  -1,225
  -1,303
  -1,382
  -1,466
Free cash flow, $m
  -204
  -305
  -466
  -686
  -981
  -1,362
  -1,844
  -2,440
  -3,161
  -4,016
  -5,013
  -6,157
  -7,451
  -8,898
  -10,496
  -12,245
  -14,142
  -16,184
  -18,367
  -20,689
  -23,146
  -25,735
  -28,454
  -31,301
  -34,277
  -37,381
  -40,614
  -43,978
  -47,476
  -51,113
  -54,891
Issuance/(repayment) of debt, $m
  -82
  234
  330
  456
  611
  796
  1,011
  1,255
  1,524
  1,815
  2,124
  2,446
  2,776
  3,111
  3,446
  3,779
  4,107
  4,429
  4,743
  5,050
  5,350
  5,644
  5,932
  6,217
  6,500
  6,783
  7,068
  7,357
  7,652
  7,954
  8,266
Issuance/(repurchase) of shares, $m
  1
  677
  988
  1,408
  1,948
  2,623
  3,446
  4,428
  5,575
  6,891
  8,377
  10,030
  11,848
  13,825
  15,954
  18,230
  20,647
  23,198
  25,880
  28,688
  31,620
  34,674
  37,850
  41,148
  44,572
  48,124
  51,809
  55,631
  59,596
  63,711
  67,985
Cash from financing (excl. dividends), $m  
  226
  911
  1,318
  1,864
  2,559
  3,419
  4,457
  5,683
  7,099
  8,706
  10,501
  12,476
  14,624
  16,936
  19,400
  22,009
  24,754
  27,627
  30,623
  33,738
  36,970
  40,318
  43,782
  47,365
  51,072
  54,907
  58,877
  62,988
  67,248
  71,665
  76,251
Total cash flow (excl. dividends), $m
  19
  605
  852
  1,177
  1,578
  2,057
  2,613
  3,243
  3,938
  4,690
  5,488
  6,319
  7,173
  8,038
  8,904
  9,764
  10,612
  11,443
  12,256
  13,049
  13,824
  14,582
  15,328
  16,064
  16,796
  17,527
  18,263
  19,010
  19,771
  20,553
  21,360
Retained Cash Flow (-), $m
  193
  -677
  -988
  -1,408
  -1,948
  -2,623
  -3,446
  -4,428
  -5,575
  -6,891
  -8,377
  -10,030
  -11,848
  -13,825
  -15,954
  -18,230
  -20,647
  -23,198
  -25,880
  -28,688
  -31,620
  -34,674
  -37,850
  -41,148
  -44,572
  -48,124
  -51,809
  -55,631
  -59,596
  -63,711
  -67,985
Prev. year cash balance distribution, $m
 
  43
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -29
  -136
  -231
  -370
  -566
  -833
  -1,185
  -1,637
  -2,201
  -2,889
  -3,711
  -4,675
  -5,787
  -7,050
  -8,466
  -10,035
  -11,755
  -13,624
  -15,639
  -17,796
  -20,091
  -22,522
  -25,084
  -27,777
  -30,598
  -33,546
  -36,621
  -39,825
  -43,158
  -46,625
Discount rate, %
 
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
 
  -27
  -119
  -187
  -276
  -385
  -513
  -655
  -804
  -953
  -1,090
  -1,207
  -1,295
  -1,349
  -1,365
  -1,342
  -1,283
  -1,193
  -1,079
  -950
  -814
  -678
  -549
  -433
  -331
  -246
  -177
  -124
  -83
  -55
  -34
Current shareholders' claim on cash, %
  100
  46.2
  22.3
  11.1
  5.7
  3.0
  1.6
  0.9
  0.5
  0.3
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Renren Inc. operates a real name social networking Internet platform in China. The Company enables users to connect and communicate with each other, share photos, and various features and services. The Company is developing Internet finance business to leverage its social networking services and user base in China, particularly focusing on the audience of college students and young people in China. The Company operates through two segments: Renren and Internet finance. The Company's Renren segment focuses on online advertising and Internet value-added services (IVAS). The Company's Internet finance segment includes Renren Fenqi, an online platform, which provides credit financing to college students in China through the form of payment by installments; its used automobile financing business, which provides credit financing to used automobile dealers, and Renren Licai, a financing and lending platform.

FINANCIAL RATIOS  of  Renren Cl A ADR (RENN)

Valuation Ratios
P/E Ratio -22.1
Price to Sales 64.8
Price to Book 5.5
Price to Tangible Book
Price to Cash Flow -370.9
Price to Free Cash Flow -370.9
Growth Rates
Sales Growth Rate 53.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 21.1%
Total Debt to Equity 26.2%
Interest Coverage 0
Management Effectiveness
Return On Assets -15.1%
Ret/ On Assets - 3 Yr. Avg. -9.5%
Return On Total Capital -17.7%
Ret/ On T. Cap. - 3 Yr. Avg. -10.7%
Return On Equity -22.2%
Return On Equity - 3 Yr. Avg. -12.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 19%
Gross Margin - 3 Yr. Avg. 18.1%
EBITDA Margin -269.8%
EBITDA Margin - 3 Yr. Avg. -251.4%
Operating Margin -279.4%
Oper. Margin - 3 Yr. Avg. -296.7%
Pre-Tax Margin -274.6%
Pre-Tax Margin - 3 Yr. Avg. -275.6%
Net Profit Margin -293.7%
Net Profit Margin - 3 Yr. Avg. -234.2%
Effective Tax Rate -1.7%
Eff/ Tax Rate - 3 Yr. Avg. -16.4%
Payout Ratio 0%

RENN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RENN stock intrinsic value calculation we used $63 million for the last fiscal year's total revenue generated by Renren Cl A ADR. The default revenue input number comes from 2016 income statement of Renren Cl A ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our RENN stock valuation model: a) initial revenue growth rate of 57.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.6%, whose default value for RENN is calculated based on our internal credit rating of Renren Cl A ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Renren Cl A ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of RENN stock the variable cost ratio is equal to 368.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for RENN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Renren Cl A ADR.

Corporate tax rate of 27% is the nominal tax rate for Renren Cl A ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the RENN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for RENN are equal to 50%.

Life of production assets of 10.5 years is the average useful life of capital assets used in Renren Cl A ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for RENN is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $738 million for Renren Cl A ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 68.046 million for Renren Cl A ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Renren Cl A ADR at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ ETFs with exposure to Renren Inc. : October 13, 2017   [Oct-13-17 11:10AM  Capital Cube]
▶ Why Renren Stock Gained 18.8% in September   [Oct-10-17 04:15PM  Motley Fool]
▶ Joe Chen's SoFi Share Snatch   [Oct-03-17 10:01AM  Forbes]
▶ ETFs with exposure to Renren Inc. : September 25, 2017   [Sep-25-17 10:44AM  Capital Cube]
▶ Renren Inc (RENN): Risks You Need To Consider Before Buying   [Sep-15-17 08:31PM  Simply Wall St.]
▶ ETFs with exposure to Renren Inc. : September 14, 2017   [Sep-13-17 08:03PM  Capital Cube]
▶ Renren reports 2Q loss   [Aug-31-17 08:04PM  Associated Press]
▶ ETFs with exposure to Renren Inc. : August 4, 2017   [Aug-04-17 07:50PM  Capital Cube]
▶ ETFs with exposure to Renren Inc. : July 10, 2017   [Jul-10-17 03:08PM  Capital Cube]
▶ ETFs with exposure to Renren Inc. : June 27, 2017   [Jun-27-17 03:37PM  Capital Cube]
▶ Renren reports 1Q loss   [Jun-21-17 08:59PM  Associated Press]
▶ ETFs with exposure to Renren Inc. : June 16, 2017   [Jun-16-17 04:14PM  Capital Cube]
▶ ETFs with exposure to Renren Inc. : June 5, 2017   [Jun-05-17 02:42PM  Capital Cube]
▶ ETFs with exposure to Renren Inc. : May 25, 2017   [May-25-17 12:47PM  Capital Cube]
▶ Renren reports 4Q loss   [May-15-17 06:24PM  Associated Press]
▶ ETFs with exposure to Renren Inc. : April 5, 2017   [Apr-05-17 05:21PM  Capital Cube]
▶ [$$] Why China Cant Get Enough of Elon Musk   [Mar-31-17 12:11AM  The Wall Street Journal]
▶ [$$] Why China Can't Get Enough of Elon Musk   [Mar-30-17 08:59AM  at The Wall Street Journal]
▶ 2 Chinese Stocks That Were Cut in Half in a Year   [Mar-02-17 06:11PM  Motley Fool]
▶ Snapchat Has Big Competition in China   [Feb-17-17 04:51PM  Investopedia]
▶ Why Shares of Renren Inc. Got Cut in Half in 2016   [Feb-07-17 12:41PM  Motley Fool]
▶ [$$] Global Uncertainty Plays to Startup FiscalNote's Hand   [Jan-23-17 07:30AM  The Wall Street Journal]
▶ ETFs with exposure to Renren Inc. : January 19, 2017   [Jan-19-17 01:47PM  Capital Cube]
▶ Renren Announces Plan to Implement ADS Ratio Change   [Jan-06-17 06:00AM  PR Newswire]
▶ Is Renren Inc (RENN) A Good Stock to Buy?   [Dec-16-16 07:38PM  at Insider Monkey]
▶ Renren reports 3Q loss   [05:03AM  AP]
▶ Why Renren Inc. Stock Jumped 13% in September   [Oct-12-16 09:32AM  at Motley Fool]
▶ Should Baidu Follow Renren This Time?   [Oct-10-16 09:17AM  at Motley Fool]
▶ Why Renren Inc. Stock Soared Today   [Oct-04-16 06:01PM  at Motley Fool]
▶ Why Lexmark, Mentor Graphics, and Renren Jumped Today   [Sep-30-16 05:59PM  at Motley Fool]
▶ [$$] VC Profile: DCM Finds Exits With East Asia-U.S. Strategy   [Sep-06-16 09:05AM  at The Wall Street Journal]
▶ Renren Issues Asset-Backed Securitization   [06:00AM  PR Newswire]
▶ Renren reports 2Q loss   [Aug-16-16 08:02AM  AP]
▶ Major Stocks Making News: Amazon, Tesla, Lululemon, More   [Jun-08-16 08:14AM  at Insider Monkey]
▶ 3 Chinese Internet Stocks That Fell Apart Last Week   [May-22-16 10:00AM  at Motley Fool]
▶ Sorry, Renren, You're No Facebook   [09:16AM  at Motley Fool]
▶ Renren reports 4Q loss   [06:30AM  AP]
▶ [$$] Sirin Labs Raises $72M to Release High-End Smartphone   [Apr-24-16 07:01PM  at The Wall Street Journal]
▶ Term Sheet Friday, March 25   [Mar-25-16 09:57AM  at Fortune]
▶ China's First Used Automobile Finance Leasing ABS Issued   [Jan-25-16 09:00PM  PR Newswire]
▶ Renren Announces Changes to Board of Directors   [Dec-31  05:00AM  PR Newswire]
Financial statements of RENN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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