Renren Story

RENN -- USA Stock

USD 8.35 0.65 7.22%

Macroaxis Story

The stock is still going through an active upward rally. As many investors are getting excited about consumer cyclical space, it is fair to outline Renren Inc as an investment option. What exactly are Renren shareholders getting in March? Here we also measure the ability of Renren to meet its long-term debt obligations, such as interest payments on debt, the final principal payment on the debt, and any other fixed obligations like lease payments.

Published six days ago

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Does Renren (NYSE:RENN) has enough cash to last in March?

The company currently holds 32.03 M in liabilities with Debt to Equity (D/E) ratio of 0.26, which may suggest the firm is not taking enough advantage from borrowing. Renren Inc has a current ratio of 0.63, indicating that it has a negative working capital and may not be able to pay financial obligations when due.

Renren financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Renren, including all of Renren's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Renren assets, the company is considered highly leveraged. Understanding the composition and structure of overall Renren debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.

Please read more on our technical analysis page.

How important is Renren's Liquidity

Renren financial leverage refers to using borrowed capital as a funding source to finance Renren Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Renren financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Renren's total debt and its cash.

How Renren utilizes its cash?

To perform a cash flow analysis of Renren, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Renren is receiving and how much cash it distributes out in a given period. The Renren cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

What is driving Renren Investor Appetite?

The latest price rise of Renren Inc created some momentum for institutional investors as it was traded today as low as 8.27 and as high as 11.84 per share. The company directors and management may have good odds in positioning the company resources to exploit market volatility in March. The stock standard deviation of daily returns for 30 days investing horizon is currently 9.12. The very high volatility is mostly attributed to the latest market swings and not very good earnings reports from some of the Renren partners.

Will Renren latest rise continue?

Total risk alpha is down to 0.25. It may entail a possible volatility slide. Renren Inc is displaying above-average volatility over the selected time horizon. Investors should scrutinize Renren Inc independently to ensure intended market timing strategies are aligned with expectations about Renren volatility.

Our Final Perspective on Renren

Whereas few other entities under the auto & truck dealerships industry are still a bit expensive, Renren may offer a potential longer-term growth to institutional investors. To conclude, as of the 20th of February 2021, we believe that at this point, Renren is unstable with low probability of distress within the next 2 years. From a slightly different point of view, the entity appears to be overvalued. Our overall 30 days 'Buy-vs-Sell' recommendation on the company is Sell.

About Contributor

Gabriel Shpitalnik is a Member of Macroaxs Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Renren Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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