Shares of Renren Inc rose as much as 8 percent Friday, after the Chinese social networking site swung back to a profit in the fourth-quarter and forecast strong 2012 sales, helped by a shift in focus to mobile Internet applications.
Beijing-based Renren, which operates one of China's largest social-networking sites Renren.com, said more and more of its users were accessing their accounts through smartphones, which offered opportunities to monetize its mobile Internet business better.
The company, dubbed as China's Facebook, expects full-year revenue to be between $177 million and $183 million, above the $175.1 million analysts expected, according to Thomson Reuters I/B/E/S.
"Our monthly mobile penetration rate of 38 percent remains encouraging as we head into the mobile-centric era," Chief Executive Joseph Chen said in a statement.
"Renren's users are increasingly shifting to mobile from PC, yet mobile Internet monetization is currently only through mobile games," Jefferies & Co, which has a "hold" rating on the company's stock, said in a note.
Renren expects to focus on monetization efforts through mobile advertisements and games, and by integrating its daily deals site Nuomi.com and Renren.com with its location-based-service.
The company debuted in a very successful U.S. IPO last May, demonstrating investor appetite for hot social media companies like Twitter, and set the stage for Facebook's IPO.
It has, however, been dogged by concerns over the quality of its financial controls, censorship by the Chinese government and more recently, slowing revenue from online advertising.
The company posted losses in its first and third quarters last year and only a small profit in the second quarter.
In the fourth quarter, net income attributable to Renren was $44.3 million, or 14 cents per ADS, compared with a net loss of $33.9 million, or 46 cents per ADS, a year ago.
Revenue from online advertising rose 66 percent, but fell well short of the growth seen in the earlier ones.
"Online advertising revenue growth is moderating, impacted by more pronounced seasonality, macroeconomic uncertainty and the migration of user traffic to mobile devices," Oppenheimer said in a research note to clients.
Renren, which means "everyone" in Chinese, forecast first-quarter revenue between $28 million and $30 million, slightly below analysts' estimates of about $31 million, according to Thomson Reuters I/B/E/S.
Renren shares were up 5 percent at $5.62 in Friday morning trade on the New York Stock Exchange. They had touched a high of $5.80 earlier in the session.
The stock has shed more than three-quarters of its value since hitting a high of $21.93 on its May 4 debut.
(Reporting by Sayantani Ghosh in Bangalore; Editing by Sreejiraj Eluvangal)