Maxim Group Reiterates Hold Rating on Renren

In a report published Wednesday, Maxim Group reiterated its Hold rating on Renren RENN. Maxim Group noted, “Management attributed the ad revenue decline to cutbacks of ad budgets, especially by apparel advertisers, under a slowing economy and intensive competition from similar but better established ad platforms. Games and ads accounted 50% and 34% of total revenue in 2Q12, respectively. Management expects these two revenue drivers to follow a similar growth trend in 3Q12. In fact, because game revenue grew to the major growth driver this year, 4Q12 may not see seasonality as in 2010 and 2011. In our view, RENN has increasingly become an online game-driven company. The business model shift may negatively affect its valuation in the future, as online game companies are on average trading at a significant discount to online ad companies.” Renren closed on Tuesday at $4.11.