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Renren's spectacular IPO could be the curtain raiser for what is to come if the world's No. 1 social networking site, Facebook, goes public next year.

Shares of Renren Inc. , China's largest social networking company, surged more than 50 per cent in its initial public offering on Wednesday - before it has even turned a profit - in the latest sign investors are eager to snap up stock in social media companies.

The stock rose as high as $21.93 (U.S.), or almost 57 per cent above its $14 IPO price on the New York Stock Exchange. Earlier on Wednesday, Renren raised $743.4-million in its IPO.

The offering came amid a land grab for hot social media companies such as Twitter, Facebook, Groupon and Zynga, which are propped up by multibillion-dollar valuations of their shares trading on the secondary markets.

"There is no doubt this just adds to the allure to a potential Facebook IPO," said Morningstar IPO strategist Bill Buhr.

Facebook has a market value of around $70-billion, based on a share sale currently being contemplated, making it worth more than companies such as Boeing Co.

Renren shares are trading at about 90 times annualized sales, estimates IPOdesktop president Francis Gaskins. That's well above Facebook, valued at 35 times last year's sales in gray market trading.

"If you like Renren, you'll love Facebook, Gaskin said.

FACEBOOK WITH "FLEAS"

With Renren, high valuations for rival companies, combined with the fact China is the world's biggest Internet market, was expected to help Renren attract strong investor demand.

Investors seemed to brush aside recent concerns dogging the company, including questions about its internal financial controls, the resignation of its audit committee chairman and the tight control and censorship of the Chinese government.

For one thing, Renren - which means "everyone" in Chinese - does not really seem sure how many users it has. According to its April 27 revised IPO filing, it said its monthly unique log-in user base grew by only 5 million, or 19 per cent, in the first quarter of 2011 - not the 7 million, or 29 per cent, it reported in its first filing only 12 days earlier.

Renren chief executive Joseph Chen told Reuters Insider the company's audit committee chairman resigned for personal reasons and that it was on track to turn a profit "very soon."

The IPO gave Renren a market value of $5.7-billion, according to an underwriter. Following the stock's rally, the value was up at about $7.7-billion at mid-afternoon.

"If you can imagine investors are enamored with Renren," said Buhr, who ticked off Renren's most recent challenges, it only bodes well for Facebook.

"(Renren) is basically Facebook with a few fleas," he added.

Renren had net revenue of $76.5-million in 2010 and about 117 million activated users as of March 31, 2011. It had about 31 million monthly unique log-in users in March 2011.

Beijing-based Renren sold 53.1 million American Depositary Shares for $14 each on Wednesday. It had planned to go public for $12 to $14 per share after raising the price estimate by 30 per cent last week from $9 to $11.

The IPO was originally expected on Tuesday after the close of U.S. markets, but was delayed until Wednesday morning.

Clearance by the Securities and Exchange Commission took longer than expected, Chen said.

Morgan Stanley, Deutsche Bank and Credit Suisse led underwriters on the IPO.

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