Facebook: China Could Be Out of Reach

Facebook may be yearning for another shot at China, but the odds are against its success. The social networking behemoth announced last week that it is considering another try at entering China, the world’s largest population of Internet users, after the government blocked its initial attempt with a firewall in 2009, Reuters reports.

But chances are a foray into China would involve serious competition, political problems and ultimately, very little success, Reuters said. A long list of foreign online giants including EBay Inc (NASDAQ:EBAY), Google Inc (NASDAQ:GOOG), Amazon.com Inc (NASDAQ:AMZN), Yahoo Inc (NASDAQ:YHOO) and Groupon Inc (NASDAQ:GRPN) have come up short in their attempts to make headway in the world’s second-largest economy, according to the report.

 

Hong Kong-based CLSA analyst Elinor Leung says it could be a little too late for Facebook, since the market already has plenty of local players such as Sina Corp(NASDAQ:SINA), Renren Inc (NYSE:RENN), Kaixinwang001 and Tencent Holdings.

In addition to local competition, other factors that cause problems for foreign Internet companies in China include government regulation and bureaucracy and challenges in appealing to local tastes according to Reuters.

Dominic Penaloza, chief executive of Chinese professional social-networking site Ushi.cn, said Facebook may have a chance in China if they could create or buy a team, then give them the autonomy to build a product that would satisfy the local market longterm. “Then they may have a decent chance to compete, not guaranteeing that they will win,” he added.

Here’s how these stocks are trading now:

eBay Inc. (NASDAQ:EBAY): EBAY shares recently traded at $33.05, down $0.21, or 0.63%. They have traded in a 52-week range of $26.86 to $35.35. Volume today was 4,388,555 shares versus a 3-month average volume of 10,501,100 shares. The company’s trailing P/E is 13.43, while trailing earnings are $2.46 per share.

Google Inc. (NASDAQ:GOOG): GOOG shares recently traded at $605.41, down $6.05, or 0.99%. They have traded in a 52-week range of $473.02 to $642.96. Volume today was 1,538,685 shares versus a 3-month average volume of 2,998,690 shares. The company’s trailing P/E is 20.34, while trailing earnings are $29.76 per share.

Amazon.com Inc. (NASDAQ:AMZN): AMZN shares recently traded at $185.72, up $0.74, or 0.4%. They have traded in a 52-week range of $160.59 to $246.71. Volume today was 4,427,843 shares versus a 3-month average volume of 6,411,670 shares. The company’s trailing P/E is 135.73, while trailing earnings are $1.37 per share.

Yahoo! Inc. (NASDAQ:YHOO): YHOO shares recently traded at $16.20, up $0.2, or 1.25%. They have traded in a 52-week range of $11.09 to $18.84. Volume today was 17,762,664 shares versus a 3-month average volume of 18,765,400 shares. The company’s trailing P/E is 19.71, while trailing earnings are $0.82 per share.

Groupon Inc (NASDAQ:GRPN): GRPN shares recently traded at $20.97, down $0.2, or 0.94%. They have traded in a 52-week range of $14.85 to $31.14. Volume today was 1,516,229 shares versus a 3-month average volume of 2,400,560 shares. The company’s trailing earnings are $-2.17 per share.

Sina Corp. (NASDAQ:SINA): SINA shares recently traded at $65.45, up $0.02, or 0.03%. They have traded in a 52-week range of $64.81 to $147.12. Volume today was 4,005,183 shares versus a 3-month average volume of 5,435,080 shares. The company’s trailing earnings are $-6.42 per share.

Renren Inc (NYSE:RENN): RENN shares recently traded at $5.30, up $0.08, or 1.53%. They have traded in a 52-week range of $4.50 to $24.00. Volume today was 12,515,807 shares versus a 3-month average volume of 6,961,970 shares. The company’s trailing earnings are $-0.85 per share.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com